NYSE Panel to Weigh a For-Profit Status

New York Stock Exchange Chief Executive John A. Thain said he would assemble a 10-person panel this month to consider whether the world’s largest stock exchange should become a for-profit business. An initial public offering may not necessarily follow.

“If you eventually become a public company, you have to be for-profit,” Thain, 49, said. “Right now, we are only addressing, ‘should we be for-profit or not?’ ”

Thain, speaking at a NYSE news briefing Tuesday, said the group would consist of three customers of the exchange, three “practitioners,” such as floor brokers, and three of the NYSE’s 1,366 members. Thain will lead the panel, which will prepare a report in April.

NYSE directors, members and the Securities and Exchange Commission must sign off on a conversion.

Becoming a for-profit company would allow Thain to make decisions without first consulting a phalanx of committees, said Dale Carlson, a spokesman for the San Francisco-based Pacific Exchange, which completed its conversion into a for-profit business in 2004.

“He can do things faster because he can do what he wants,” Carlson said. “He would be completely accountable.”

The exchange’s not-for-profit status is at the heart of New York Atty. Gen. Eliot Spitzer’s May lawsuit against former Chairman Richard Grasso. Spitzer alleges Grasso’s $190-million pay over eight years was unreasonable for the leader of a not-for-profit outfit.

A conversion could also mean payments for members whose seat values have tumbled. Not-for-profits are prohibited from paying a dividend, Thain said. As of Dec. 31, 2003, the NYSE had investment securities of $868.6 million, according to its most recent annual report.

Recent exchange IPOs thrived. Chicago Mercantile Exchange Holdings Inc., owner of the largest futures market, went public in December 2002 at $35 a share. It rose $1.74 on Tuesday in NYSE trading, to $210.40.