NEW YORK, April 7 -- Former State Street Corp. chief executive Marshall N. Carter took over from John S. Reed Thursday as chairman of the New York Stock Exchange, the NYSE said.
Carter, an NYSE board member and senior fellow at Harvard University's John F. Kennedy School of Government, will help preside over a venerable but troubled institution beset by scandal in recent years, first over the compensation of former chairman Dick Grasso, then by allegations that NYSE floor traders, known as specialists, profited for themselves at the expense of investors.
Chief executive John A. Thain, above, will split leadership duties with chairman Marshall N. Carter at the New York Stock Exchange. Carter will head the exchange's regulatory function and Thain its day-to-day business.
(Peter Morgan -- Reuters)
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At the height of the scandals, some analysts wondered whether the NYSE, the last big exchange to rely on human traders and a physical trading floor, would survive.
But under Reed, the former co-chief executive of Citigroup Inc., and John A. Thain, the former senior Goldman Sachs & Co. official Reed recruited as NYSE chief executive, the exchange regained its footing.
The NYSE has built faster trading systems and this week won a hard-fought regulatory battle when the Securities and Exchange Commission voted to keep in place a rule that requires stock trades to be executed at the best possible price. Relaxation of the so-called "trade-through rule" had been viewed as a possible death knell for the NYSE.
In addition to his private sector experience, Carter, 64, is a decorated Marine veteran with experience in Washington, where he served as a White House fellow and on a committee on global securities.
"It is a great privilege to chair the board of the world's leading equities market at a time of historic opportunity," Carter said in a statement. "Moving forward, our market is positioned to extend our leadership on a broad range of fronts, including protecting investor interests, transforming our market model, raising the bar on self regulation and governance, and ensuring the highest quality market for our customers."
Carter, who will receive an annual salary of $250,000, moves to the top of a new governance structure for the NYSE that Reed designed when he was called out of retirement to shore up the foundering exchange. The chairman now controls the NYSE's regulatory function while the chief executive handles day-to-day business operations. The NYSE is a federally chartered "self-regulatory organization" charged with monitoring its members, mainly Wall Street brokerage and trading firms.
During the Grasso scandal, critics blasted the exchange as a weak regulator riddled with conflicts of interest because its board members came mainly from regulated firms. That is no longer the case, though members continue to vote for board members.
NYSE members on Thursday voted to approve three new NYSE directors: former Maryland securities commissioner Ellyn L. Brown, former Clinton administration budget director Alice M. Rivlin, and Karl M. von der Heyden, former vice chairman and chief financial officer of PepsiCo Inc. Two current directors, Reed and former secretary of state Madeleine K. Albright, did not seek reelection to the board, which now has 10 members.
