“The New York Stock Exchange announced plans yesterday to open electronic trading to institutional investors to a much greater extent than it has before, saying it hoped the move would assure that it would not be damaged by changes the Securities and Exchange Commission is considering for market structure rules,” writes Floyd Norris in today’s New York Times.

” ‘We want to be very customer-sensitive,’ said John A. Thain, the exchange’s chief executive, after the exchange’s board approved rule changes that will be sent to the S.E.C. for approval.”

“The exchange faces a substantial competitive threat as the S.E.C. weighs changes in market structure, particularly in a rule that electronic exchanges want to change to make it easier for investors to trade on those markets even if their prices are not as good as those on the Big Board.”

“The New York Stock Exchange’s ability to resist changes in the rule, known as the trade-through rule, was damaged last year by the scandal that erupted after it was disclosed that Richard A. Grasso, its former chairman and chief executive, had been paid $139.5 million. That led to Mr. Grasso’s being forced out and to a revamping of the exchange’s management structure.”

“Mr. Thain, in addressing questions over possible efforts to recover some of that money from Mr. Grasso, said it was up to the S.E.C. and Eliot Spitzer, the New York attorney general, to decide whether to begin legal action.”

“Asked if that meant the exchange’s new board would not file a suit against Mr. Grasso, he responded, ‘We have no plans to bring an independent suit.’ He did not say whether the exchange might somehow join in an action brought by regulators.”

“Mr. Thain also said that compensation for top executives of the exchange would be down 10 percent to 20 percent this year.”

“The electronic trading moves announced by the exchange concern its Direct-plus system. Currently, it allows only limit orders – that is, orders to be executed at a particular price – and has a maximum of 1,099 shares for each order. There is also a rule that no single customer can enter a second order into the system within 30 seconds of the first.”

“The new rules would allow market orders – that is, orders to buy or sell at the market price – to be placed in any size, and would end the 30-second rule. Such orders would be executed almost immediately at the best bid or asked price, up to the limit of the number of shares bid for or offered in the exchange system.”