NYSE Panel to Weigh a For-Profit Status

New York Stock Exchange Chief Executive John A. Thain said he would assemble a 10-person panel this month to consider whether the world’s largest stock exchange should become a for-profit business. An initial public offering may not necessarily follow.

“If you eventually become a public company, you have to be for-profit,� Thain, 49, said. “Right now, we are only addressing, ‘should we be for-profit or not?’ �

Thain, speaking at a NYSE news briefing Tuesday, said the group would consist of three customers of the exchange, three “practitioners,� such as floor brokers, and three of the NYSE’s 1,366 members. Thain will lead the panel, which will prepare a report in April.

NYSE directors, members and the Securities and Exchange Commission must sign off on a conversion.

Becoming a for-profit company would allow Thain to make decisions without first consulting a phalanx of committees, said Dale Carlson, a spokesman for the San Francisco-based Pacific Exchange, which completed its conversion into a for-profit business in 2004.

“He can do things faster because he can do what he wants,� Carlson said. “He would be completely accountable.�

The exchange’s not-for-profit status is at the heart of New York Atty. Gen. Eliot Spitzer’s May lawsuit against former Chairman Richard Grasso. Spitzer alleges Grasso’s $190-million pay over eight years was unreasonable for the leader of a not-for-profit outfit.

A conversion could also mean payments for members whose seat values have tumbled. Not-for-profits are prohibited from paying a dividend, Thain said. As of Dec. 31, 2003, the NYSE had investment securities of $868.6 million, according to its most recent annual report.

Recent exchange IPOs thrived. Chicago Mercantile Exchange Holdings Inc., owner of the largest futures market, went public in December 2002 at $35 a share. It rose $1.74 on Tuesday in NYSE trading, to $210.40.