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It’s been more than a month since Richard Grasso resigned as chairman of the New York Stock Exchange. But in that time, the exchange has not escaped further controversy. Grasso’s resignation has created a series of cascading events that has culminated in an attack on the very manner in which the Big Board trades stocks.

It began as a controversy over the CEO’s pay package. It morphed into a call for reform of the governance of the exchange. Now it’s turned into a debate about the very future of the New York Stock Exchange and the structure it should take — with many questioning not only how the exchange is run, but whether it is truly fair to investors.

“I think the reforms and the changes were happening anyway,” said Jarrett Lilien, chief operating officer of online broker eTrade. “But certainly these days, when you get your self in the press in a bad way, you get a lot of attention. And it speeds up a lot of change.”

Indeed, things have been moving fast. After Grasso’s resignation last month, former Citicorp CEO John Reed was brought in as interim chairman. Reed is considering big changes in the way the NYSE governs itself.

Meanwhile, the Securities & Exchange Commission is looking at how the NYSE conducts its trading.

“In the coming months, the commission will be focusing with increased intensity on the structure of the U.S. equity markets with particular regard to their fairness and efficiency,” said SEC Chairman William Donaldson, also a former NYSE chairman.

At the NYSE that fairness and efficiency is largely in the hands of specialists, each of whom controls all the trading in any given stock.

But recently Fidelity Investments, the NYSE’s biggest customer, dropped a bombshell — advocating that the NYSE eliminate the specialist system and move toward all-electronic trading.

As a result, competitors like Instinet have become more vocal as they smell opportunity to take market share from the NYSE.

“What people believe the specialists have been doing, and the floor has been doing, for many years is using the informational advantage they have down there for their own benefit rather than for the benefit of their customers,” said Instinet CEO Ed Nicoll.

The calls for change come as the exchange recently announced it will be handing down substantial fines to five specialist firms for alleged trading improprieties.

Is the specialist system in danger? Some think so.

“We are beginning to see the end of the specialist system,” said Professor Charles Geisst at Manhattan College. “And it’s remarkable that it’s been around for 200 years.”

One thing is certain: Change is coming to the exchange in the form of new management and a new board structure.

But the question now on many minds is will the NYSE’s 200-year-old trading by specialists start to look more like the electronic trading networks of the 21st Century? Or will we end up with a hybrid system that uses both systems?

“Wall street’s survival at the end of the day depends on a revolution,” said Geisst. “It may not be immediate. In fact it would be a bad idea if it were. But I think the public wouldn’t stand for anything less anymore.”

© 2011 MSNBC Interactive

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