As the New York Stock Exchange reels from the furor surrounding Dick Grasso, other trading floors are hoping companies are willing to make a trade themselves – to their boards.
“In many respects this has been the opening that detractors and competitors have been waiting for,” said Michael Weiser, a long-time consultant to U.S. securities exchanges. “What (the NYSE) is unquestionably concerned about is the perception that it isn’t transparent. It has to be concerned, because more and more people have alternatives.”
Officials at one of those alternatives, electronic trader Archipelago, said that Grasso’s departure could help level the playing field.
The NYSE “uses monopoly power to fend of competitors,” said Jerry Putnam, chairman and CEO of Archipelago. “They use their power as a regulator to strong-arm companies to trade on their exchange. It’s a little like the police opening a bar and then intimidating patrons who try to go anywhere else.”
Putnam said that the Grasso incident should force the board to reform the NYSE, including the regulatory rules.
Of course, that’s been talked about for decades, Weiser noted; “When I came on the street in 1974, it was old news then.” But those changes may have a better chance of gaining traction now, he said.
“Because of the rise of electronic trading, people care. It’s no longer a blind item. It’s no longer, ‘Trust me,’ ” Weiser added. “The democratization of the American corporation has reached the floor of the New York Stock Exchange.”
The larger question is whether the NYSE will be permanently tarnished by Grasso’s huge compensation package and the secrecy with which it was granted.
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