NEW YORK — Far from the end of a saga, Richard Grasso's resignation Wednesday night as chairman of the New York Stock Exchange raises the prospect that the world's leading stock market soon could undergo the most wrenching structural changes in its 211-year history.
In the short term, the furor over Grasso's $140-million compensation may swell further as increasingly vocal critics push for the ouster of the directors who awarded him that sum.
Beyond that, the NYSE must grapple with a host of issues that define its very nature, including the future of its oft-maligned trading system and whether it should be a regulator as well as a market operator.
"We are about to see a sea change at the NYSE," said Junius Peake, a finance professor at the University of Northern Colorado and an expert on securities markets. "They are going to have to restructure their operation, their culture, their governance and their whole business."
Grasso's departure is likely to speed the NYSE's day of reckoning on many issues because, for better or worse, he largely championed the status quo, many observers say.
To his supporters, Grasso brilliantly marketed the exchange and maintained its dominance against the rival Nasdaq Stock Market and a host of upstart electronic trading systems.
Despite an onslaught of competition, the NYSE still handles about 80% of the trading in the stocks listed on its market. The comparable figure for Nasdaq is far lower.
"No one ever questioned [Grasso's] ability to do his job. He was superb," said Charles Elson, director of the University of Delaware's corporate governance center.
When CNBC and the era of financial cable TV shows dawned in the 1990s, the Big Board let stations broadcast from its floor. Nasdaq was forced to build a site in Times Square to compete for attention.
In an era in which technology revolutionized the trading of stocks around the globe, Grasso protected the NYSE's historic floor-based trading model in which human intermediaries shepherd stock trades, albeit with substantial assistance from computers.
Until the pay flap erupted, the floor brokers and "specialist" trading firms that are at the heart of the NYSE largely had supported Grasso, viewing his strategies as helping to preserve their livelihoods.
Grasso was one of their own: He began at the NYSE as a clerk 36 years ago, and understood the minutiae of how the exchange worked as well as anyone in its history.
"In my opinion, he was doing an excellent job and replacing him will not be easy," said Wayne Wagner, chief executive of Plexus Group, a trading consulting firm in Los Angeles.
However, Grasso's critics have blasted him for maintaining what they say was a veil of secrecy over the exchange's internal workings. The uproar over his pay has focused attention on the NYSE's long-standing reputation for limited disclosure about its own operations.
"It's an onion. You just keep peeling it," said Andy Brooks, head of equity trading at mutual fund giant T. Rowe Price Associates.
Even as it badgered corporate America to reform policies on issues such as the make-up of boards, the NYSE was violating many of the tenets it was preaching, critics say. For example, the NYSE had long refused to disclose its top officers' pay. It recanted this year after heavy pressure from the media and the Securities and Exchange Commission.
A basic criticism of the exchange is that it has been run for the benefit of its Wall Street members rather than for the investing public.
Earlier this year, Grasso nominated Sanford Weill, the chief executive of Citigroup Inc., to be a member of the NYSE board representing "public" investors -- even though his firm had paid a huge fine to settle government investigations of its stock analysts. Weill eventually withdrew his nomination after a firestorm of criticism.
"Part of the problem is that the NYSE is still very much an old-boys club where important decisions are made in smoke-filled backrooms," said Samuel Lek, chief executive of Lek Securities Corp. in New York, which owns three exchange seats.
The most immediate effect of Grasso's resignation could be an exodus of board members and a revamping of the way new directors are picked.
Twelve of the exchange's 27 board seats are reserved for securities firms, with a large concentration from the biggest brokerages. Three seats are held by NYSE executives, and the rest are divided among public representatives, listed companies and big investors.
Critics want to decrease the representation of big Wall Street firms, giving more of a voice in part to institutional investors such as mutual funds, which trade stocks on behalf of small investors.
"The basic problem is that the board is dominated by people whose goals aren't consistent with the NYSE's goals," said Jonathan Macey, a securities law professor at Cornell University. "These are broker-dealers who compete, in many ways, with the NYSE itself."