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Richard Grasso Assumes Posts Of Chairman, CEO of Big Board

By Dave Kansas, Staff Reporter
The Wall Street Journal

June 1, 1995

New York -- As he assumes the chairmanship of the New York Stock Exchange today, Richard A. Grasso says he will continue the Big Board's effort to lure more international corporate listings, upgrade trading floor technology, and enhance oversight efforts.

In an interview, Mr. Grasso also said the Big Board will consider extending trading hours. Past efforts to extend trading hours have met stiff opposition from the Big Board's floor membership. But Mr. Grasso said the Big Board remained committed to studying the concept, especially as financial markets become increasingly global.

A 26-year veteran of the Exchange, Mr. Grasso, 48 years old, is the first staff member to take the chairman and chief executive officer posts in the Big Board's 203-year history. He succeeds William H. Donaldson, 63, who was chairman since 1991.

Mr. Grasso plans to create an office of the chief executive which will consist of himself and three group executive vice presidents who will be named today. According to Big Board insiders, the three executive vice presidents in the office will be Catherine R. Kinney, head of equities and audit, Edward A. Kwalwasser, head of regulation, and Robert G. Britz, head of listings and client services.

Mr. Grasso has been President of the Exchange since June 1988 and executive vice chairman since Jan. 1991. Those positions will remain open. He came to the Exchange in 1968, first working as a "listing representative."

In an interview last month, Mr. Grasso outlined his plans for the exchange and identified key challenges that the Big Board must grapple with as the new millennium approaches. "How do you stretch the clock and live to tell about it?" Mr. Grasso asked. "Maybe we could stretch the trading day to 16, 18 or 20 hours a day, but nonstop trading is a long way off."

Like his predecessor, Mr. Donaldson, he believes that the international marketplace offers the most likely growth area for the Exchange. Big Board executives have made trips to Asia and Europe in the past few years in an effort to build the number of overseas firms listing on the exchange. The Big Board has 211 non-U.S. listed companies out of more than 2,500 listed companies.

But Mr. Grasso acknowledged that the Big Board has struggled in its effort to build the international list in the past six months. He said the Mexican financial crisis "cratered" the initial public offering market from that country and also sent shock waves through the rest of Latin America.

Moreover, efforts to woo large European companies, especially from Germany, have not proceeded as quickly as anticipated. Daimler-Benz remains the sole German listing, and Mr. Grasso conceded that he thought by now three or four German companies would have been listed.

Mr. Grasso also must direct the Big Board's strategic response to the growing trend among brokerage firms to transact business in Big Board stocks in places like the Cincinnati Stock Exchange and Chicago Stock Exchange. Brokerage firms who do so can reap bigger profits through a practice called "preferencing," which enables brokerage firms to match buyers and sellers of listed stocks away from the New York Stock Exchange. But it isn't clear how the Big Board can fight back without weakening its standards for protecting investors.

"I think the overriding issue for [Mr. Grasso] will be the future of the auction market," said Benjamin Edwards III, chairman of A.G. Edwards Inc., a brokerage firm in St. Louis. "I believe in the auction market myself, and thus far the exchange has been able to keep up technologically with the dealer-based market. Still, I think that competition will be the single biggest issue facing the new chairman."

Copyright (c) 1995, Dow Jones & Co., Inc.