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NYSE's Reed Defends Specialist System

Under the new, stricter standards, a majority of a listed company's directors must be independent.

November 05, 2003|From Reuters

One day before he releases his reform plan for the New York Stock Exchange, Interim Chairman John Reed said he planned to keep the exchange's specialist floor-based trading system and said he would propose slashing the size of the exchange's board.

In a speech to the Assn. of Financial Professionals in Orlando, Fla., on Tuesday, Reed said he would propose an eight-member board, which would not include him. Reed, who was recruited out of retirement to take his post, added that he did not see himself taking a role as a non-executive chairman.

"I can't tell you how much I've enjoyed retirement. I think it is extremely important for the exchange that I come and go," Reed said.

Currently, the NYSE board is made up of 27 members, including 12 directors from the securities industry and 12 "public directors." The board has been criticized as being too large to be effective and too closely tied to the financial companies that it is charged with regulating.

An NYSE spokesman said the specific composition of the new, smaller board would be unveiled today.

There will be "about two" directors who will move over from the old board to the new board, he said, and the six new names will be announced. He declined to name the directors.

Reed stood behind the specialist system, which has become a hot spot of criticism in the debate over Big Board reform.

He said he would keep the NYSE "specialist-based, rather than systems-based."

The 211-year-old institution is the last major exchange to use a floor-trading system, resisting a switch to all-electronic trading like its rival, the Nasdaq Stock Market.

A formal vote on the proposals will be Nov. 18.

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