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New NYSE CEO to Stay Close to Thain's Strategy

Reuters
Thursday, 15 Nov 2007 | 12:23 PM ET

Newly appointed NYSE Euronext Chief Executive Duncan Niederauer subtly differentiated himself from predecessor John Thain Thursday, but said he planned no change of strategy or philosophy at the exchange.

"He's more the finance guy; I'm more the market structure guy," Niederauer said at a banking conference in New York.

Thain, his ex-boss, was appointed CEO of Merrill Lynch on Wednesday. Niederauer, 48, who joined the Big Board in April after 22 years at Goldman Sachs, is also likely to call on his experience at the investment bank to help him run the world's largest exchange group.

He said he planned to "borrow Goldman Sachs' best practices to make what is already the best exchange group in the world even better."

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Thain is credited with turning the NYSE into a publicly traded global exchange group and increasing the use of automated trading. He also gained a reputation as a dealmaker, steering the exchange through two big mergers.

"Will our strategy be rethought after John's departure? Absolutely not," Niederauer said at the Merrill Lynch banking and financial services conference.

Niederauer said the exchange would continue to look for deals that make strategic and financial sense.

Asked by an audience member how he would balance NYSE's strategic growth with financial targets, Niederauer said: "I've been on the job for about six hours, so my answer is, 'Not sure yet."'

At Thursday's presentation, his focus was clearly on improving the quality of NYSE's market, an area he has been working on since he joined the exchange as president and co-chief operating officer.

He is often on the stock exchange floor, talking about floor trading issues with specialists and traders.

Niederauer pushed for rule changes to make floor trading more efficient, a focus he said he will maintain as CEO.

The first quarter of 2008 will see "version 2" of NYSE's hybrid market model that combines human traders with screen-based trading, Niederauer said.

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"Version 2 will redefine the role of specialists further," he said.

Specialists are traders on the NYSE floor who facilitate the smooth buying and selling of particular stocks and manage volatility. The move to electronic trading has severely hurt the businesses of the seven specialist firms.

Dutch specialist firm Van der Moolen said Thursday it would close its unprofitable U.S. trading shop on the floor as soon as possible.

Niederauer said he believed the hybrid model has value, but specialists will have to adapt to changing markets.

"These market makers on the floor have to go through what a lot of people in the industry have gone through," he said.

But he said the exchange was pressing for rule changes with the U.S. Securities and Exchange Commission that would tie specialists' obligations to maintain smooth markets with financial incentives.

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