The resignation of Richard A. Grasso as chairman of the New York Stock
Exchange has created a once-in-a-generation opportunity to improve the
exchange's commitment and ability to serve the public interest. But if the
board and management of the exchange close ranks and resist further
change, investors will know that they can expect business as usual in the
post-Grasso era.

How will we know whether the exchange is serious about reform? Look for
action in three crucial areas: the exchange's board, its management and
its transparency.

The first step for the exchange is to diversify its board of directors.
The days when the Big Board could be governed for and by a small group of
specialists, members, regional brokerages and listed companies should be
long gone. Yet their interests, along with those of the huge financial
conglomerates, still predominate.

A majority of the directors, as well as the board's chairman, should be
from outside the industry. At the very least, the compensation committee
ought to consist solely of outside directors. Institutional investors,
shareholder activists, academics, the same constituencies who have had
such an impact on reforming the boards of public corporations in recent
years, should be given a greater voice.

The structure of the exchange must also be made more efficient, with
management duties separate from regulatory functions. The regulatory
function should be pristine, set apart from the business concerns of the
exchange and the influence of its members, its managers or other industry
insiders. The exchange should name a chief regulator who would report
directly to a committee of independent, non-industry directors. Meanwhile,
a chief executive could oversee the exchange's business affairs and serve
as head cheerleader and administrator.

Finally, the exchange needs to open up its books. Last week's fiasco has
only underscored the degree to which the investing public is ignorant of
how the exchange is run. Much greater transparency is essential if the
public is to have faith in the stewardship of management and the board.

At a minimum, the exchange should disclose its revenues and earnings, go
public with its management and governance structure and reveal how it goes
about nominating candidates for its board. These requirements are no more
than what the exchange itself demands from the companies it lists.

Remember, this is an institution that has considered becoming a public
company itself. Clearly, that idea should be forgotten until the exchange
demonstrates its willingness to conduct its affairs in the light of day.

As necessary and obvious as these changes may be, they will not be easy
for the exchange to swallow. Those who have been running the exchange for
generations would have to cede control to outsiders who serve the
investing public's interests before those of the financial industry.

This opportunity to reconsider the institution, its function and its
responsibility to society cannot be squandered. The New York Stock
Exchange is an integral part of a capital system that has made America the
envy of the world. It is no accident that most technological breakthroughs
come from the United States. In part because of the exchange, American
companies have the funds they need to innovate, grow and start whole new
industries.

Now we must restructure the exchange so that we can maintain and enhance
its vitality and credibility. We can only hope that the current board,
having acted wisely and ethically in seeking Mr. Grasso's removal, will
follow its impulse for reform to its logical conclusion.

Muriel Siebert, the first woman to own a seat on the New York Stock
Exchange, is chairwoman and chief executive of Siebert Financial Corp.

This article appeared in the New York Times on September 21, 2003.