New York Stock Exchange

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Authors: Sanjib Dutta, K Subhadra,
Faculty Member, Faculty Associate,
ICMR (IBS Center for Management Research).

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Governance Structure at NYSE

NYSE's governance structure comprised of five important elements: Board of Directors (BoD), standing and advisory committees, a nominating committee, professional executive management and not-for-profit status.

BoD & Standing and Advisory committees
The 1366 broker-dealer members of the exchange elected the BoD which consisted of 27 members (12 - industry directors, 12 - non industry directors and 3 members of the office of the chairman). No director was allowed to be on the board for more than three consecutive two-year terms. The NYSE constitution defined industry director as " (1) an individual member, (2) an individual who is a principal executive, general partner or control person of a member organization, or (3) a principal executive of an organization whose "principal" subsidiary is a member organization." The day-to-day working of the exchange was overseen by the board. The board played an active role in formulating policies and programs governing the working of the exchange. Further NYSE constituted various standing and advisory committees which comprised of NYSE directors for regulating the functioning of NYSE.

The exchange had five standing committees, ten advisory committees and four international advisory committees.

Nominating Committee
The nominating committee consisted of eight members - four from industry category and four from non-industry category. The members of the nominating committee were elected for two years and no member could be re-elected for the second consecutive term. The nominating committee nominated members to be elected to the BoD.

Professional Management
Though till 1970s, members of the exchange oversaw the day-to-day functioning of the exchange, from early 1970s, a professional management team was appointed by the Chairman and CEO with the approval from the board to oversee the administrative matters. But executive vice-president was directly elected by the board.

Not-for-Profit Status
Initially NYSE was a formed as membership organization and in 1971 it was incorporated under Not-for-profit Corporation Act. The main aim of the exchange was to maximize the reliability and integrity of market functioning rather than to maximize profits.

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