[Economics Report]:New York Stock Exchange, Part 2: Proposed Reforms


This is Bob Doughty with the VOA Special English EconomicsReport.

Last week we told about the New York Stock Exchange and theresignation of its chairman, Richard Grasso. This week we tell aboutproposals by the temporary chairman, John Reed, to reform theworld's biggest stock market.

Mister Grasso spent thirty-five years there, the last eight aschairman. He left in September after the public learned about hispay. The Board of Directors had awarded him a deal worth almostone-hundred-eighty-eight-million-dollars.

Critics said investors could not trust the board because of itsclose ties to the investment companies that the exchange supervises.

Earlier this month, Mister Reed proposed that instead oftwenty-seven directors, he wants at most twelve. He asked all buttwo of the current directors to resign. The two are former Secretaryof State Madeleine Albright and Herbert Allison Junior. MisterAllison is chairman of T-I-A-A-CREF, a financial services company.Both joined the board this year.

Mister Reed said his plan would create the first totallyindependent board in the two-hundred-eleven-year history of theexchange. He also says the exchange should continue to have thepower to police itself. Critics of his plan called for greaterseparation between those who enforce the rules of the exchange andthose who must obey them.

Members of the exchange will vote on the plan Novembereighteenth. For his services as temporary chairman, Mister Reed willbe paid one dollar.

There have also been calls to reform an important group ofmembers of the New York Stock Exchange. These are calledspecialists.

Specialists are central to trading on the New York StockExchange. Each stock listed on the exchange is represented by aspecialist. They receive requests to buy stocks. They bring buyersand sellers together. They buy and sell stocks for themselves.Specialists also are expected to use their own money to help controlstock prices.

Recently, the exchange accused five specialist companies of usingtheir position unfairly. It says they put their own interests aheadof those who trade stock for the public. The exchange is seekingtotal fines of about one-hundred-fifty million dollars. TheSecurities and Exchange Commission in Washington is urging higherfines and a wider investigation.

This VOA Special English Economics Report was written by MarioRitter. This is Bob Doughty.

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