NEW YORK -- John A. Thain said yesterday that he plans to expand NYSE Group Inc.'s derivatives trading business and remain at the helm of the world's largest stock exchange as long as necessary to oversee the merger with Paris-based Euronext NV.
"I definitely have to stay here to make sure that the whole Euronext deal is integrated and that we deliver," Thain said in an interview. "If you look at the mix of our business, I'd like the derivatives piece to be bigger because derivatives are both growing faster and have better margins."
Thain gave himself three to five years to run the New York Stock Exchange, the world's largest equity market, when he became chief executive officer after leaving his job as president of Goldman Sachs Group Inc. in 2004. Since then, he has turned the 214-year-old NYSE into a publicly traded company, overhauled its trading systems and engineered the $12.4 billion takeover of Euronext to create the first trans-Atlantic equity exchange.
Thain, 51, said he plans to stay on to deliver on the company's forecast for a threefold increase in profit to $938 million by 2008. His to-do list includes increasing the NYSE's stake in National Stock Exchange of India Ltd. NYSE Euronext also may invest in Chinese exchanges once government restrictions are eased, perhaps as soon as next year, he said.
"There is no deadline here; there is no reason why I can't stay longer," Thain said. "I still think that making the changes we needed to make will take the better half of five years, but that doesn't mean I couldn't stay longer than that."
NYSE Euronext will own stock exchanges in New York; Chicago; Lisbon, Portugal; Paris; Brussels, Belgium; and Amsterdam, handling more than $100 billion in trades a day. It also will own Europe's second-largest futures market, Euronext.Liffe. Last month, the NYSE reached an agreement with the Tokyo Stock Exchange that could lead to the markets making investments in each other.
"We still have a global vision and we're two-thirds of the way through that," said Thain. "We still need the Asian pieces."
NYSE Group shareholders have supported the strategy. The stock is up 32 percent since its debut a year ago, after the Big Board completed its purchase of Archipelago Holdings Inc. Shares of Nasdaq Stock Market Inc. fell 26 percent in the same period. NYSE shares rose $1.11, or 1.3 percent, to close at $84.51 yesterday.
During Thain's tenure, the value of NYSE memberships surged fourfold. Based on NYSE Group's share price, a seat is worth about $7.1 million, up from $1.5 million in January 2004.
Thain was paid about $6 million last year, regulatory filings show. He received $20.1 million in salary and bonus in his last year at Goldman Sachs, the world's largest securities firm by market value.
The NYSE's competitors in derivatives trading are growing through acquisitions. Derivatives are financial instruments derived from stocks, bonds, loans, currencies and commodities, or linked to specific events such as changes in the weather or interest rates.
The Chicago Mercantile Exchange, the world's biggest futures market, plans to gain shareholder approval next month for its $8.9 billion purchase of the Chicago Board of Trade. The New York Mercantile Exchange, the world's largest energy market, will develop new contracts to trade in Canada after acquiring 10 percent of Montreal Exchange Inc.
In U.S. options trading, NYSE Group is less than half the size of the Chicago Board Options Exchange, data from Options Clearing Corp. show. The Liffe futures market that's part of Euronext primarily trades euro-denominated contracts.
"The U.S. is an obvious place where we don't have the type of derivative business we would like," Thain said. "I don't think you will see us do another big deal at least for a year because we have to make sure we have the Euronext deal done."
NYSE Euronext plans to generate $100 million a year in additional revenue by drawing users to the Liffe market, according to a regulatory filing last June. In the next three years, the combined company plans to consolidate data centers and trading systems to save $250 million in expenses.
"There is a lot of savings that we'll get between the two of us and some of that will go to the shareholders, and some of that will go to lower prices," said Thain, referring to the fees that brokers have to pay to execute trades.
As he took charge of the exchange in 2004 after the ouster of Richard A. Grasso, Thain said he wanted to oversee a three-to-five year plan to increase electronic trading and bolster the exchange's regulatory unit.
His hiring of Duncan Niederauer as co-chief operating officer stoked speculation among analysts about Thain's potential successors. Niederauer, a 22-year Goldman veteran, "cast serious doubt" about whether Gerald Putnam, who formerly was co-COO, would succeed Thain, Sandler O'Neill & Partners analyst Richard Repetto wrote in a report.
"Since I am not going anywhere, there is nothing to that speculation," said Thain.
And he said that as far as his original timetable goes: "I'm actually sorry I ever said that."