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NYSE's for-profit merger granted final approval

Federal regulators on Monday approved the merger of the New York Stock Exchange with electronic rival Archipelago Holdings Inc., a market-shaping deal that will transform the 213-year-old Big Board into a for-profit company.

The Securities and Exchange Commission announced its approval of the $9-billion transaction, which will give the NYSE - the world's biggest stock exchange - high-tech trading capabilities and an estimated 49 percent of the market in stock trading.

It was the final hurdle for the deal, which won approval late last year from the Justice Department, NYSE seat owners and Archipelago shareholders.

"The evolution of our major exchanges into for-profit, publicly traded companies that compete on a global basis will require increasingly vigorous and vigilant regulation," SEC chairman Christopher Cox said in a statement. "The (SEC) has worked with the NYSE . . . to adopt changes in the proposed regulatory structure for the combined entity that will increase the independence of regulation and oversight."

Revelations of allegedly widespread violations by trading firms at the NYSE, along with a scandal in late 2003 over the $188-million pay package of its former chairman, Richard Grasso, called into question the long-established system of self-regulation by the exchanges - in which they are responsible for policing their traders and the SEC oversees the exchanges themselves.

Among the changes agreed to by the NYSE: A majority of members of the exchange's board must be independent of management, and the board's committees - including those that set compensation for exchange officials - has to be fully composed of independent members.