| Stepping Forward |
29 September 2003
|
Reed May Bring 21st Century to NYSE
John Reed, former head of Citigroup, was selected to take over the leadership of the New York Stock Exchange from Richard Grasso, who was sacked after legitimately accepting money from a board he had selected. Reed (whose approach to capital is not to be confused with those of the John Reed buried in the Kremlin Wall) will be paid $1 for however long he serves, and who will be responsible for calming the nerves of the excessively rich. He might even make a few improvements.
The biggest changes expected are the splitting off of the regulatory arm and the appointment of a separate chairman and CEO. The biggest change of all though is likely to come in the abolition of the "open-outcry" system of trading. Mr. Grasso, who loved the 18th system of yelling out bids and asks, is gone, which allows the NYSE to reconsider joining the 21st (or even just the 20th) century.
Open-outcry is not as transparent as the automated systems seen elsewhere, such as the London Stock Exchange, and as a result, it is open to abuse. The only factor in its favor is tradition, putting it in the same league as human sacrifice, Sunday blue laws and faxes -- all have been undone by human progress.
Automated systems have their draw backs, but so long as the power stays on in the northeast of the US, they offer an improvement over the current system. Mr. Reed should have it rammed through in the next 18 months. If so, anything else he achieves will be a (non-monetary) bonus.
Home