NEW YORK - New York Stock Exchange interim chairman John Reed aired his reform plan Wednesday and nominated eight members for a trimmed-down board to improve regulation. Critics say it may not be enough to eliminate trading abuses and conflicts of interest.
The Securities and Exchange Commission, which must approve the reforms, called the plan a ‘‘substantial and critical first step’’ but said more changes likely will be needed for the world’s richest stock market.
Reed’s plan, which was mailed Tuesday to the NYSE’s 1,366 members for approval by Nov. 18, envisions the departure of all directors who were involved in approving the $188 million compensation package of former chairman Dick Grasso.
Outrage over lavish pay forced Grasso’s ouster on Sept. 17 and gave momentum to efforts to reform the exchange, including streamlining its bloated 27-member board and distancing its regulatory and money-making activities.
Reed proposed keeping just two current members of the board — former Secretary of State Madeleine Albright and Herb Allison, chairman of the teachers pension fund TIAA-CREF — while limiting the overall number of directors to between six and 12.
Other candidates are Euan Baird, former chairman of oilfield services concern Schlumberger Ltd.; Marshall Carter, former head of State Street Bank; Shirley Ann Jackson, president of Rensselaer Polytechnic Institute; James McDonald, former chief executive of Rockefeller & Co.; Robert Shapiro, former chairman of agricultural and chemical giant Monsanto Co.; and Sir Dennis Weatherstone, former CEO of J.P. Morgan Chase.
Aspects of Reed’s plan have emerged in recent days, in news reports or in statements by exchange officials. Wednesday was the first time details of the plan were made public.
Reed already has requested and received the resignations of a majority of the current directors that will take effect if the plan is approved. NYSE members, who had been briefed earlier on the outlines of the plan, are expected to approve it.
The current board would be replaced by one that oversees regulation and compensation. Securities industry executives would not be allowed to be members, but would instead form a separate executive panel to provide input on operations, such as listing standards and market structure.
‘‘There’s no question that the old board did not serve the institution well,’’ Reed said. ‘‘I think these proposals are good. I think it’s robust. . . . It makes me comfortable that (the likelihood of ) another breakdown in corporate governance is extremely small.’’
The plan stops short of separating the NYSE’s regulatory unit from its operations, and leaves intact the model of trading through human brokers. A recent SEC report disclosed by The Wall Street Journal detailed widespread trading abuses in the so-called specialist trading system and criticized the NYSE as slow to enforce regulations.
The SEC said Reed’s plan ‘‘represents a significant rethinking’’ of the exchange and will help create independent oversight. But ‘‘additional reforms beyond the proposal put forth today will likely be considered,’’ it said.
North Carolina treasurer Richard Moore, manager of $56 billion in pension assets, agreed.
‘‘I’m not convinced they’re ever going to want a truly independent regulatory arm unless it’s forced on them,’’ he said.