New York market chiefs face grilling

DIRECTORS of the New York Stock Exchange face a grilling following the resignation of its vice chairman.

The Securities and Exchange Commission and New York Attorney General Eliot Spitzer will require answers over Robert Murphy's departure, which deepens divisions inside the NYSE over a trading violations inquiry.

Murphy, who quit on Thursday, is head of trading at LaBranche, one of the market's seven specialist trading firms which deal in specific stocks on the exchange floor.

LaBranche is refusing to provide emails demanded by the NYSE as part of an investigation into allegations that LaBranche and four other firms broke trading rules. The firm claims the emails are private and therefore not relevant, but the exchange rejects this.

The NYSE's failure to get the emails may persuade Spitzer and the SEC, who have been pressuring the exchange to reform, that it is not up to the task of improving its own corporate governance.

The exchange says no pressure was put on Murphy to go and Murphy said he had resigned to spend more time with his company. NYSE chairman Richard Grasso said earlier this year that anyone not co-operating with the investigation would be ejected from the exchange.

Executives of two other companies under investigation remain on the NYSE board after Murphy's departure.

The five firms allegedly violated their responsibility not to interfere in trades where a buyer and a seller could be matched.

Both the SEC and Spitzer have put the NYSE on notice that they expect it to clean up its own corporate governance and bring itself up to the standards of a publicly quoted company. Murphy is the fourth NYSE director to resign in the past two years in the wake of scandals.