“The two largest stock markets in the United States plan to tell the Securities and Exchange Commission today that they are not ready to make changes to their corporate governance policies now,” writes Floyd Norris in today’s New York Times.

“William H. Donaldson, the chairman of the S.E.C., asked the markets to respond by today to his request for the discussion of changes that the exchanges should make in their corporate governance practices.”

“The Nasdaq stock market, in a response provided by a Nasdaq official, will tell Mr. Donaldson that its governance already complies with all rules that apply to public companies and that it meets all the guidelines for improved governance that it has proposed to apply to the companies it lists.”

“Most notably, Nasdaq said it did not want to make one change that the S.E.C. has been urging before it is formally classified as a stock exchange, something it has applied for. That change would require that Nasdaq member firms — rather than shareholders in the Nasdaq market, which is now a public company — elect the brokerage industry directors that serve on the Nasdaq board.”

“The New York Stock Exchange, in a letter from Richard A. Grasso, its chairman and chief executive, told Mr. Donaldson that the exchange had established a governance committee and laid out its plan to consider changes.”

“But the latest draft of Mr. Grasso’s letter, provided last night by a person close to the governance committee, did not say how rapidly the Big Board expected to move.”

“Nasdaq’s submission notes — in what could be considered a dig at Mr. Grasso — that it has recently separated the jobs of chairman and chief executive, as some corporate governance experts have advised. But it has not moved to require that of its listed companies.”

“The Securities Act of 1934 required that stock exchanges have directors from the brokerage industry who are selected by the members. In recent years, the S.E.C. has interpreted that as requiring that at least 20 percent of an exchange’s board be chosen by the members of the exchange.”

“Some exchanges that have sold shares to the public have adopted that proposal and have required that some directors be elected by the members, rather than by shareholders.”

“But Nasdaq argues in the submission that that requirement is no longer necessary. While almost half of its board is now from the brokerage industry, it is elected by the exchange’s shareholders, which include brokerage firms but also include other investors. Shares of Nasdaq are traded in the over-the-counter market.”

” ‘The concept of member representation seems particularly outmoded in application to an all-electronic exchange that has no seats or “members” in the traditional sense,’ said the Nasdaq submission, adding that there was no limit on the number of firms that could be members of Nasdaq.”

“The S.E.C.’s director of market regulation, Annette Nazareth, said in an interview that the commission had been pressing Nasdaq to change its procedures if it is to be regulated as a stock market.”