NYSE 'must keep policing powers'

The interim chairman of the New York Stock Exchange yesterday vowed to oppose any efforts to strip the institution of its regulatory powers.

Following his first formal meeting with the board of the exchange, John Reed said retaining the regulatory role of the NYSE was a "critical success factor for the business model" of the market.

Mr Reed is attempting to restore confidence after the exchange was nearly engulfed in the scandal over compensation paid to ousted chairman Richard Grasso last month. Members of the exchange and some of the largest American pension funds expressed outrage after it emerged that Mr Grasso had been awarded $188m (£113m) in deferred compensation, $48m of which he declined in an attempt to defuse the situation.

Critics have suggested a broad range of reforms including stripping the exchange of its regulatory role because of potential conflicts of interest. Mr Reed likened that to removing the quality control from Toyota, the car-maker.

Mr Reed said the 27-strong board was unwieldy and would be trimmed. Compensation for the top board members would be published in the next month or so.

Mr Reed said the NYSE would "go beyond" the standards it sets for companies listed on the exchange. A review of governance, which began before the recent controversy, was presented during yesterday's meeting. Mr Reed said proposals for reform were likely to be made public within three or four weeks and the constitution of the exchange rewritten by the year-end.

· A former trader at the $4bn hedge fund Millennium Partners, Steve Markovitz, yesterday pleaded guilty to a criminal charge of securities fraud for illegal trading in mutual fund shares. At the same time Citigroup brokerage unit Smith Barney sacked a broker for cancelling mutual fund trades after the market closed.