The New York Stock Exchange took a new step towards emerging from the gloom of scandal yesterday by appointing John Thain, the number two executive at Goldman Sachs, as its new chief executive.
The announcement came one day after regulators approved a new governance structure for the exchange, which is trying to regain its balance after the dramatic ousting in September of its former chief, Richard Grasso, whose autocratic style was matched by a pay package this year of $188m (£106m).
Mr Thain, who has run the European operations of Goldman Sachs as well as its electronic trading platforms, will replace John Reed, who was hastily picked as interim CEO after the departure of Mr Grasso. Mr Reed, formerly a top executive at Citigroup, will remain as chairman for a short period but said he was not interested in retaining the role on a permanent basis.
The reforms drawn up by Mr Reed and approved this week include splitting the top job into separate posts of CEO and chairman, a move designed to dilute power at the top. The exchange is also setting up a second board, made up of outside directors, which will be responsible for regulating its activities.
There was some disappointment that the NYSE chose a Wall Street insider as its new CEO instead of someone from outside the industry. However, Mr Thain's experience at Goldman with computerised trading may mean that he will begin to guide the exchange out of its antiquated system of specialist traders matching buyers and sellers in favour of the introduction of electronic trading.
Lloyd Blankfein, who heads Goldman's bonds and commodities business and is vice-chairman of the investment bank, was named to replace Mr Thain as Goldman's president.
Mr Thain, 48, said his main goal would be to ensure that the NYSE remained "the most liquid and most efficient marketplace, and that may involve a greater degree of electronic trading".
Mr Reed said Mr Thain brought to the exchange "a number of exceptional qualities for which he is widely known: integrity, intelligence, and extensive knowledge of the financial markets. I think we have an exceptional person at a time when frankly we require an exceptional person".
Mr Thain's honeymoon is likely to be short, however. A group of state pension funds this week complained that the reforms so far were not far-reaching enough. "We are very disappointed that the SEC has voted to approve the Reed plan without seeking further changes besides splitting the chair and CEO positions," the fund officials said.
This week, the California Public Employees Retirement System (Calpers), the largest pension fund in the US, said it was filing a class-action lawsuit against the NYSE and seven specialist trading firms - including Goldman Sach's Spear, Leeds & Kellogg - alleging that fraudulent practices cost it millions of dollars in recent years. Calpers is seeking unspecified damages.Reuse content