NYSE Unit Seats Sought by Industry

The securities industry’s main lobbying groups want the New York Stock Exchange to include brokerage firm executives on the board of its regulatory unit once it becomes a for-profit company.

The NYSE is about to transform into a public company from a member-owned, not-for-profit institution through its purchase of Archipelago Holdings Inc., a Chicago-based electronic market. The NYSE’s regulatory arm, which oversees more than 300 securities firms that handle $4 trillion in assets, will become a nonprofit subsidiary with a separate board.

The Securities Industry Assn. and the Bond Market Assn. asked regulators to require the Big Board to draw from their ranks at least two directors of the nine-person board of NYSE Regulation. The move, the associations say, would mitigate conflicts of interest stemming from the NYSE’s oversight of brokerages that may compete against the exchange.

“The need for fair representation of those who understand the day-to-day issues of the securities business is heightened by the new for-profit nature of the exchange,” the groups said Thursday in a letter to the Securities and Exchange Commission.

SEC approval is the final obstacle for the completion of the merger, which will form a company called NYSE Group Inc.

The Securities Industry Assn., which represents about 600 securities firms, and the Bond Market Assn. also asked regulators to require the NYSE to report on the progress of its efforts to combine some regulatory functions with the NASD.

Scott Peterson, a spokesman for NYSE Regulation, declined to comment on the request.