SB1058

The operator must satisfy both conditions: engage in activities described by 2022 NAICS category 523210 and be subject to registration with and regulation by the Securities and Exchange Commission or Commodity Futures Trading Commission. Census defines that category as establishments primarily furnishing physical or electronic marketplaces for buying and selling stocks, stock options, bonds or commodity contracts. Its cross-references place brokerage/dealing and exchange clearinghouses in other categories, so merely handling investments does not establish eligibility. Final law, section 2(z)(3); 2022 NAICS manual, printed page 429 (PDF page 431).

The excluded amount is a transaction rebate paid by the operator to a broker or dealer as part of a securities purchase or sale, to incentivize that broker or dealer to provide market liquidity. It is not an exclusion for every operating expense, every securities payment or the operator’s entire revenue. The recipient’s broker/dealer status follows the incorporated federal definitions, which contain specific exceptions for certain bank activities and distinguish a regular dealing business from a person simply trading for their own account. Final law, section 2(y)–(z); 15 USC 78c(a)(4)–(5).

For these new provisions, “security” uses the existing Texas cross-reference to Internal Revenue Code section 475(c)(2), plus the instruments in section 475(e)(2)(B)–(D). This includes specified securities and derivative or hedging instruments; the additional commodity references are to the specified instruments, not a blanket inclusion of all physical commodity sales. The bill extends where that definition applies rather than creating a new universal meaning of “security.” Final law, section 1; Prior Texas definition; Federal instrument definitions.

The introduced bill would have excluded qualifying payments on both sides: payments made by an exchange and payments received by an exchange member. The Senate committee substitute removed the recipient-side exclusion and recast the rule around a registered market operator paying a broker or dealer, with the NAICS and federal-registration conditions. The Senate committee, Senate-passed, House committee and enrolled operative texts match. The amendment index lists no floor amendments. The final law should not be described as granting the introduced recipient-side exclusion. Text versions; Amendment index; Enacted text.

Compare the published text versions in the official text index. A change is not attributed to a specific amendment here without a verified record.

Eligible market operators may have lower franchise-tax liability because the specified rebates are removed from total revenue used in the tax calculation. Actual savings depend on the operator’s circumstances; no individual amount is guaranteed. Brokers or investors might experience indirect market effects, but the act does not establish lower trading fees, improved liquidity or a recipient tax exemption as a measured result. Final law; Total-revenue framework.

The Senate-substitute fiscal analysis forecasts a $560,000 loss to the Property Tax Relief Fund in fiscal 2027, following no loss in fiscal 2026; it forecasts $580,000 in 2028, $600,000 in 2029 and $620,000 in 2030. It says any loss must be replaced with an equal amount of General Revenue for the Foundation School Program. The separate General Revenue-related table shows zero, but that does not mean there is no fiscal cost. No local-government fiscal impact is anticipated. Senate-substitute fiscal note.

The forecast assumed the planned Texas exchanges’ rebate volume would initially equal 5% of NASDAQ’s, with the first franchise-tax report effects in 2027. Those were forecasting assumptions about planned operations, not findings that the exchanges opened as projected or that those losses actually occurred. The act is not an appropriation or direct subsidy payment. Fiscal methodology; Final law.