NYSE's Thain takes on biggest challenge yet
NEW YORK (Reuters) - John Thain, the newly appointed chief executive of Merrill Lynch & Co MER.N, may have his last job as New York Stock Exchange chief to thank for landing him the top post at the world's largest brokerage.
The NYSE job, which Thain took in early 2004 after 24 years with Goldman Sachs Group Inc (GS.N), allowed him to polish his Wall Street reputation as a technocrat and a numbers guy. It also gained him attention as a forward-looking strategist, a disciplined dealmaker and a man of action.
Thain wasted no time in transforming the scandal-ridden exchange he inherited from a member-owned club into a publicly traded, increasingly electronic and global exchange group.
At the exchange, Thain confronted a legal battle with predecessor Richard Grasso, who was forced out in 2003 amid a scandal over excessive compensation of nearly $200 million. Thain also handled a specialist trading scandal resolved in 2005.
He then steered the exchange through two mergers, including NYSE's April takeover of European markets operator Euronext NV, which analysts regard as the most important deal in the industry because it has speeded consolidation.
"John Thain is a good choice, in our view, since he has previously been No. 2 of a larger investment bank, has shown an ability for savvy dealmaking ... and the capability to retool a company while at the NYSE," said Deutsche Bank analyst Mike Mayo in a research note.
Immediately after assuming the NYSE's top post, Thain drove the acquisition of listed electronic trading platform Archipelago Holdings Inc, a deal that ultimately turned the NYSE into a public company.
Thain, 52, has often talked about his vision of the world being dominated by four or five global, multi-product exchange groups, and was determined to keep NYSE Euronext in the ring as a major consolidator.
He won plaudits from Wall Street for overhauling the trading structure at the exchange. He introduced a "hybrid" model combining the value of human traders on the floor with increased automation. It now takes 110 milliseconds to execute a trade at the Big Board, compared to about 10 seconds before the hybrid model.
Although Thain always emphasized the value of the floor to NYSE's trading model, he had been ruthless in implementing changes that shrank the floor to half its size and dramatically reduced headcount. Traders nicknamed him "I,Robot" for his methodical and technocratic manner.
These traits might serve him well at Merrill, where results have been roiled by the impact of an $8.4 billion write-down, mostly from bad bets in sub-prime mortgage-related securities.
'TECHNOLOGY ROADMAP'
Earlier this year, Thain named Duncan Niederauer, his colleague from Goldman, as president and co-chief operating officer to help manage the exchange's transition to electronic trading. Niederaurer, 48, is set to succeed Thain in the CEO job.
Thain also hired Larry Leibowitz, former head of UBS (UBSN.VX) Americas Equities, to oversee U.S. cash equities operations. Both men are known to support electronic trading, which makes markets quicker and more efficient.
Celent analyst David Easthope said Thain had two main accomplishments at the NYSE. Continued...
