Reed Meets With NYSE Traders
John S. Reed, interim chairman of the New York Stock Exchange, told traders Wednesday that he would focus on restoring credibility at the exchange by improving its governance practices.
Reed, in his first meeting with members and traders who work at the exchange, said he was examining all aspects of the exchange’s operations and expressed support for its floor-based auction system.
“He said he wanted to reinforce the positive aspects of the stock exchange, with customers and everyone involved,” said Francis Maglio, a seat owner who sold his floor brokerage firm last year.
The tone contrasted with a members’ meeting Sept. 18, one day after Richard Grasso was forced to resign amid a firestorm over his $139.5-million compensation package. Some members then called for the board that approved Grasso’s pay to resign and complained that higher trading and regulatory fees were squeezing their profits while exchange executives thrived.
Some of the same sentiments were expressed Wednesday but with moderation, people at the meeting said. Maglio said he and others urged Reed to commission an audit to explain how directors allowed Grasso’s compensation to reach such levels.
Some traders asked Reed to disclose the pay of exchange co- Presidents Catherine Kinney and Robert Britz, who attended the meeting. Their compensation hasn’t been made public.
Reed, 64, the former chairman and chief executive of Citicorp, came out of retirement Sept. 21 to accept the interim post at the NYSE. He said his priority was finding a permanent leader to run the exchange by early next year and restructuring the board so it fairly represented the NYSE’s constituencies of owners, listed companies and public investors.
In the two weeks since his arrival, board members H. Carl McCall and Juergen Schrempp have resigned, saying they wanted to give Reed a chance to set his own agenda.
McCall had been New York state comptroller and Schrempp is chairman of DaimlerChrysler. Reed said this week that he regretted their departures and hoped other board members would remain while governance structures were worked out.
Reed, who will conduct his first board meeting today, spent his first week talking to exchange employees, individual directors and Securities and Exchange Commission chief William H. Donaldson.
At today’s meeting, the board was expected to discuss issues including negotiations on Grasso’s severance, a structure for new board representation, establishing a search committee for a full-time chairman and CEO and progress on settling an NYSE investigation of trading practices on its floor.
At the meeting Wednesday with brokers and specialists who execute trades from the public, Reed said he and the SEC’s Donaldson agreed that the NYSE’s auction-market system was not in need of overhaul. Institutional investors have said more trades should be automated.
The meeting was led by the three directors representing floor members: Robert Fagenson, Christopher Quick and James Duryea.
Others who spoke included former broker William Higgins, who said members who leased out their seats should have board representation; Maglio; UBS Financial Services floor operations chief Arthur Cashin; Michael LaBranche, chief executive of the NYSE’s biggest specialist firm; and former specialist John Jacobson.
