Notice2025-13080
In the Matter of the Application of Texas Stock Exchange LLC for Registration as a National Securities Exchange; Order Instituting Proceedings To Determine Whether To Grant or Deny an Application for Registration as a National Securities Exchange Under Section 6 of the Securities Exchange Act of 1934
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
July 14, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 132 (Monday, July 14, 2025)</title>
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[Federal Register Volume 90, Number 132 (Monday, July 14, 2025)]
[Notices]
[Pages 31360-31362]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-13080]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103422; File No. 10-249]
In the Matter of the Application of Texas Stock Exchange LLC for
Registration as a National Securities Exchange; Order Instituting
Proceedings To Determine Whether To Grant or Deny an Application for
Registration as a National Securities Exchange Under Section 6 of the
Securities Exchange Act of 1934
July 9, 2025.
I. Introduction
On January 31, 2025, Texas Stock Exchange LLC (``TXSE'') filed with
the Securities and Exchange Commission (``Commission'') a Form 1
application (``Form 1'') under the Securities Exchange Act of 1934
(``Act''), seeking
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registration as a national securities exchange under Section 6 of the
Act.\1\ On April 2, 2025, TXSE submitted Amendment No. 1 to its Form
1.\2\ Notice of the amended Form 1 was published for comment in the
Federal Register on April 10, 2025.\3\ The Commission has received
comment letters in support of TXSE's Form 1.\4\
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\1\ 15 U.S.C. 78f.
\2\ In Amendment No. 1, TXSE submitted updated portions of its
Form 1, including Exhibits A-3 (Proposed First Amended and Restated
Limited Liability Company Agreement of Texas Stock Exchange LLC), B-
1 (Rules of Texas Stock Exchange LLC), C (information regarding
subsidiaries or affiliates), E (description of the proposed
operation of the exchange), H (listing applications), J (list of
officers, governors, members of all standing committees, or persons
performing similar functions), and K (shareholders owning 5% or
more). TXSE's Form 1 as amended, including all its exhibits, is
available at: <a href="https://www.sec.gov/rules-regulations/other-commission-orders-notices-information/txse-form-1">https://www.sec.gov/rules-regulations/other-commission-orders-notices-information/txse-form-1</a>.
\3\ See Securities Exchange Act Release No. 102773 (Apr. 4,
2025), 90 FR 15375.
\4\ The public comment file for TXSE's Form 1 (File No. 10-249)
is available on the Commission's website at: <a href="https://www.sec.gov/comments/10-249/10-249.htm">https://www.sec.gov/comments/10-249/10-249.htm</a>.
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Section 19(a)(1) of the Act \5\ requires the Commission, within
ninety days of the date of publication of notice of an application for
registration as a national securities exchange, or such longer period
as to which the applicant consents, to, by order, grant such
registration \6\ or institute proceedings to determine whether such
registration should be denied.\7\ This order is instituting proceedings
under Section 19(a)(1)(B) of the Act \8\ to determine whether TXSE's
application for registration as a national securities exchange should
be granted or denied, and provides notice of the grounds for denial
under consideration by the Commission, as set forth below.
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\5\ 15 U.S.C. 78s(a)(1).
\6\ 15 U.S.C. 78s(a)(1)(A).
\7\ 15 U.S.C. 78a(a)(1)(B).
\8\ 15 U.S.C. 78s(a)(1)(B).
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II. Overview of TXSE's Trading System
TXSE proposes to operate a fully automated limit order book for
orders to buy and sell securities with a continuous automated matching
function. TXSE would execute orders in price/time priority, and would
``rank equally priced trading interest within the System in time
priority in the following order: (i) The portion of a Limit Order with
a Displayed instruction; (ii) Limit Orders with a Non-Displayed
instruction (including the Reserve Quantity of Limit Orders); and (iii)
Orders with a Peg instruction, ranked in priority based upon the time
such orders were initially received by the System.'' \9\ TXSE would not
maintain a physical trading floor. Liquidity would be derived from
orders to buy and orders to sell submitted to TXSE electronically by
its registered broker-dealer members from remote locations. TXSE
proposes to have one class of membership open to registered broker-
dealers, and also would allow members to register under TXSE rules as
market makers on TXSE and be subject to certain specified requirements
and obligations set forth in TXSE's proposed rules.
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\9\ Proposed TXSE Rule 11.008. Capitalized terms used but not
defined herein have the meanings specified in Exhibit B-1.
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A more detailed description of the manner of operation of TXSE's
proposed system can be found in Exhibit E to TXSE's Form 1. The
proposed rulebook for the proposed exchange can be found in Exhibit B
to TXSE's Form 1. A complete set of forms concerning membership and
access can be found in Exhibit F to TXSE's Form 1.
With respect to governance, TXSE would be a subsidiary of its
parent company, TXSE Group Inc. (``TXSE Group''), which would directly
hold 100% of the equity of TXSE. In turn, TXSE Group would be owned by
a group of investors that are party to a stockholders' agreement
(``Stockholders' Agreement''). The Stockholders' Agreement would
provide a 40% cap on beneficial ownership of stock of TXSE Group by any
person (alone or together with its related persons) and would further
cap beneficial ownership of TXSE Group by members of TXSE at 20%.
The governing documents for TXSE can be found in Exhibit A to
TXSE's Form 1, and a listing of the officers and directors of TXSE can
be found in Exhibit J. The governing documents for TXSE Group,
including the Stockholders' Agreement, can be found in Exhibit C to
TXSE's Form 1.
III. Proceedings To Determine Whether To Grant or Deny the Application
and Grounds for Potential Denial Under Consideration
As required by Section 19(a)(1)(B) of the Act,\10\ the Commission
is hereby providing notice of grounds for denial under consideration,
as set forth below. Institution of such proceedings is appropriate at
this time in view of the issues raised by the application. Institution
of proceedings does not indicate that the Commission has reached any
conclusions with respect to any of the issues involved.
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\10\ 15 U.S.C. 78s(a)(1)(B).
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Under Section 19(a)(1) of the Act, the Commission shall grant an
application for registration as a national securities exchange if the
Commission finds that the requirements of the Act and the rules and
regulations thereunder with respect to the applicant are satisfied. The
Commission shall deny such application for registration if it does not
make such a finding.\11\ Under Section 6(b) of the Act, an exchange
shall not be registered as a national securities exchange unless the
Commission determines that it has satisfied the relevant requirements
of the Act.\12\ In particular, Section 6(b)(1) of the Act requires that
the Commission determine that an exchange is so organized and has the
capacity to carry out the purposes of the Act.\13\ In addition, under
Section 6(b)(3) of the Act, the Commission must determine that the
rules of the exchange assure a fair representation of its members in
the selection of its directors and administration of its affairs and
provide that one or more directors shall be representative of issuers
and investors and not be associated with a member of the exchange,
broker or dealer.\14\ Section 6(b)(5) of the Act requires that the
rules of the exchange be designed, among other things, to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities, to remove impediments to and perfect the mechanisms of a
free and open market and a national market system, and in general to
protect investors and the public interest.\15\ Finally, under Section
6(b)(8) of the Act, the Commission must determine that the rules of the
exchange do not impose any burden on competition that is not necessary
or appropriate in furtherance of the purposes of Act.\16\ The
Commission requests comment on all aspects of TXSE's Form 1, including
comment on any specific Exhibits,\17\ as well as any information or
data that would help the Commission's review of TXSE's Form 1.
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\11\ 15 U.S.C. 78s(a)(1).
\12\ 15 U.S.C. 78f.
\13\ 15 U.S.C. 78f(b)(1).
\14\ 15 U.S.C. 78f(b)(3).
\15\ 15 U.S.C. 78f(b)(5).
\16\ 15 U.S.C. 78f(b)(8).
\17\ See supra note 2.
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IV. Request for Written Comment
The Commission requests that interested persons provide written
views and data with respect to TXSE's Form 1 and any relevant issues.
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Comments may be submitted by any of the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#285a5d444d054b4745454d465c5b685b4d4b064f475e"><span class="__cf_email__" data-cfemail="bccec9d0d991dfd3d1d1d9d2c8cffccfd9df92dbd3ca">[email protected]</span></a>. Please include
File No. 10-249 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File No. 10-249. This file number
should be included on the subject line if email is used. To help the
Commission process and review your comments more efficiently, please
use only one method. The Commission will post all comments on the
Commission's internet website (<a href="https://www.sec.gov/rules/other">https://www.sec.gov/rules/other</a>). Copies
of the submission, all subsequent amendments, all written statements
with respect to TXSE's Form 1 filed with the Commission, and all
written communications relating to the application between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for website viewing and printing in the Commission's Public
Reference Room, 100 F Street NE, Washington, DC 20549, on official
business days between the hours of 10 a.m. and 3 p.m. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer to File No. 10-249 and should be submitted on or before
August 4, 2025.
By the Commission.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-13080 Filed 7-11-25; 8:45 am]
BILLING CODE 8011-01-P
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