Directors of the New York Stock Exchange yesterday voted in favor of turning the exchange into a for-profit entity but pushed back any public offering of shares to sometime next year, pending review of regulatory and tax issues.

Big Board Chairman Richard Grasso had earlier proposed transforming the exchange into a stockholder-owned corporation by November of this year. But Securities and Exchange Commission Chairman Arthur Levitt had raised questions about the plan, including how the exchange would continue to supervise its members' activities under the new structure. The SEC will have to approve any of the proposed changes.

Under the revised plan, the NYSE first will come up with a strategic business plan that will answer the question of whether it should go public.

It is the first time in its 200-year-old history that the exchange is grappling with the issue. Merrill Lynch & Co. did a pro bono analysis of the proposal for the NYSE, and the board's decision is based on that report.

The Nasdaq Stock Market, the NYSE's main competitor, decided in July to evaluate the option of turning itself into a for-profit entity. Both exchanges are under pressure from new electronic communications networks (ECNs) that can execute trades less expensively. "It is increasingly important for us to take a sweep of the new environment," Grasso told reporters.

Changes in SEC rules two years ago that required Nasdaq market-makers to publicly display their price quotes gave rise to the ECNs. This year the SEC permitted those alternative trading systems to apply to become stock exchanges themselves, so they would no longer have to route their trades through either exchange.

Two ECNs have already applied for stock-exchange status.

The new competition has prompted both the NYSE and Nasdaq to want to become more flexible. Their current membership structure can become cumbersome when trying to make competitive decisions quickly, officials said.

But the NYSE plays a crucial role as the regulator of its market participants. Nasdaq's parent, the National Association of Securities Dealers, plays a similar role. Critics fear that as for-profit entities, the exchanges may prove less effective in investigating and punishing delinquent traders--some of whom would likely be their major shareholders.

"Public perception is clearly the issue," said Hans R. Stoll, a professor of finance at Vanderbilt University. "The responsibility will need to be delineated," he said.

Levitt last month warned the two stock exchanges that any plans of wider ownership should ensure that the "self-regulatory role will continue to be zealous, adequately funded and imbued with the public interest."

Reacting to yesterday's vote by the NYSE board, Levitt said the SEC shared a "common interest in ensuring that any future self-regulatory structure is consistent with the protection of investors and the maintenance of fair and orderly markets."

Grasso said the NYSE may spin off its regulatory unit, or merge it with the NASD's regulatory arm. Critics counter that unless the regulatory body is financially independent from the for-profit exchange, shifting its place on the organizational chart makes little difference. The NYSE has said it would earmark a portion of its proceeds from the stock sale in itself to fund the regulatory body.

Regulators would like the NYSE to lay bare the exact mechanics of separating the self-regulatory functions before buying its argument. "You can control the regulatory function by controlling the purse strings," said Phil Feigin, executive director of the District-based North American Securities Administrators Association.

Besides the regulatory issue, the NYSE will have to determine what percentage of the new company to distribute to its 1,366 seat holders. Then there is the question of whether members would be required to pay capital gains taxes on the difference between the value of the seats they own and the shares they would receive.

Any plan would need to be approved by at least two-thirds of the NYSE members in addition to federal authorities.