Yesterday we described the transitional rules for board independence that would apply to NYSE Euronext in the aftermath of the merger.  We noted that the transitional rules largely resulted in a suspension of the NYSE independence policy. In addition, the NYSE Group asked the Commission to approve permanent changes in its independence policy. These include:

the inclusion of an additional insider on the board (the deputy chief executive officer, in addition to the CEO);

the elimination of the automatic disqualification as independent those persons who serve as directors of affiliates of NYSE broker-dealers; and

the elimination on the automatic disqualification as independent for CEOs of listed companies, although only executive officers of foreign private issuers are eligible.

The policy will allow employees of foreign brokers (those not registered under the Exchange Act) to sit on the board of NYSE Euronext, something possible under the prior policy but far more likely afte the merger.  Finally, the policies as they currently exist and will exist after the merger provide that anyone not meeting the independence requirement is deemed to have tendered his or her resignation “for consideration by the Board” but does not require that the board accept it.

In other words, the policy as approved will allow on the board of NYSE Euronext:  (1)  CEOs of listed companies; (2)  directors of broker dealer affiliates, and (3) persons working for foreign brokers. In effect, it is a board no longer guaranteed to be independent of the entities it regulates.  Nonetheless, despite these changes, the releases state that all directors (except the two insiders) of NYSE Euronext must be independent (specifically that they must "satisfy the independence requirements set forth in the Independence Policy") and that the NYSE Euronext independence policy will be substantially simlar to the one used by NYSE Group.  Substantial doubt exists about both propositions.