Goldman Sachs Group Inc president John Thain was named head of the scandal-ridden New York Stock Exchange on Thursday, putting him in charge of a 211-year-old institution wrestling with deep structural questions over how best to run its business.
The appointment of the Wall Street insider comes at the end of a tumultuous year for the world's No. 1 stock exchange. Regulators have been investigating its floor traders and its management has been thrown into disarray since long-time chairman Richard Grasso was ousted in September amid withering criticism of his US$188 million pay package.
Thain, Goldman's former finance chief and current right-hand man to the firm's CEO, Henry Paulson, will succeed interim NYSE chairman and CEO John Reed.
The 48-year-old Thain will receive US$4 million in annual pay, in stark contrast to Grasso's compensation package.
Despite Thain's long association with Goldman Sachs -- which owns specialist floor trading firm Spear, Leeds & Kellogg -- he has said more electronic trading would be good for the market.
"I do think more of the trading will be done electronically," Thain said on Thursday.
At the same time though, Thain said the exchange, which already does a great deal of trading electronically, still needs specialists.
"I believe specialists are important to the functioning of the marketplace ... they deal with all kinds of large, complicated trades," he said. "It is very important that the specialists continue to play a role on the floor of the exchange."
Thain's status as a Wall Street insider left the exchange, which is investigating its floor-traders and attempting to revamp its governance structure, open to criticism.
"My first impression is that ... it's the goat minding the cabbage patch," said John Bogle, founder of Vanguard Group. "I don't think you can be more of a consummate insider than Goldman Sachs."
Others echoed this sentiment.
"We would have been more optimistic about the potential for change had the new chairman at least appeared to be more independent of exchange operations," said John Wheeler, manager of equity trading at American Century Investment Management.
For his part, Reed said it made sense to appoint a chief executive who was familiar with Wall Street and trading operations.
"For us to bring in some greatly talented executive from the aerospace industry, just to choose an arbitrary example, doesn't make any sense," Reed said at a press conference at the exchange's headquarters in lower Manhattan.
Reed, who is also on the board of directors of the Massachusetts Institute of Technology with Thain, said he will stay on as chairman until a new one is found.
Reed will become non-executive chairman when Thain formally starts his new job Jan. 15. Reed said he was not interested in remaining chairman on a permanent basis, but would be willing to stay on as a board member, if the new chairman and CEO wished him to.
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