This is a partial transcript from Your World with Neil Cavuto, September 19, 2003, that was edited for clarity.

Watch Your World w/Cavuto weekdays at 4 p.m. and 1 a.m. ET.

NEIL CAVUTO, HOST: Of course, it’s not only who runs the New York Stock Exchange (search), but what ultimately that exchange will be.

My next guest says that fundamental changes in the way the big board works are in order. With us now, former SEC Chief David Ruder, now at Northwestern University Law School in Chicago.

Mr. Ruder, I think you heard what the governor had to say. Do you agree that the board itself needs to sort of better explain itself?

DAVID RUDER, FORMER SEC CHAIRMAN: I don’t think that’s the main task of this board. I think this board has to be very concerned about the organization of the exchange and about its future. This is a wonderful opportunity for the New York Stock Exchange to look inwardly and to find its way to a great future.

CAVUTO: I know it’s a quasi-private institution with regulatory responsibilities. A lot of folks still have a tough time getting their hands around that.

But the fact that the chairman of the exchange can earn at a minimum $6 million to $8 million, at its height $30 million, when his counterparts, let’s say, either at the Fed or the SEC, are earning about $150,000, $170,000, something is wrong with that, is it not?

RUDER: Well, I think that’s much too much for a regulator to earn, but the stock exchange is, after all, a business, and we’re past that. I think it’s fairly clear that the next chairman’s not going to earn those stratospheric amounts. So there will be something that is in accord with his capabilities and his job.

CAVUTO: See, I think that’s why a lot of these guys are turning it down, because, as the governor pointed out, for many of them, it will probably prove to be pay cuts, and I know to most folks outside that the business world -- when you hear $2 million and some people are sniffing at it -- I mean that’s the reality, right?

RUDER: Well, I think it’s much too early to speculate on who’s going to be the new chairman.

CAVUTO: Well, what about Arthur Levitt, one of your successors?

RUDER: Arthur Levitt would be wonderful, but I think the first thing the board has to do is to figure out what’s on its plate for the future. We’re talking about the possible separation of regulation from the commercial side.

We’re talking about the possibility of creating a public company instead of a membership company, and we really need to look at the way in which the exchange works. The question of whether it should go all electronic or whether it should continue in its present state...

CAVUTO: Well, do you think it should be all electronic?

RUDER: I’m not close enough to know the answer to that. I certainly think certainly that the exchange should look to its future. Electronic is the way of the future for most other exchanges in the world, and the question is whether, after close analysis, this is going to be the way to go.

CAVUTO: Because, you know, a lot of people who examine exchanges around the world and see all those people yelling and shouting on the floor of the big board have said that system itself is archaic and that we’re going toward this computerized global trading system anyway. Is that what’s going to have to be addressed?

RUDER: Well, of course it has to be addressed, and the SEC, of course, is looking at the total market picture. I know the New York Stock Exchange would like to be the only stock exchange in the world so it could have a central limit-order book, the kind of thing people have been talking about, but there has to be a way for the exchange to function as an electronic -- or perhaps with its auction system -- participant in the whole world.

CAVUTO: All right. Are you interested in the job if someone asks you?

RUDER: I would respond to that if someone asked me.

CAVUTO: Yes or no?

RUDER: I don’t respond to questions like that.

CAVUTO: OK. Just thought I’d ask. We’re trying to limit the pool here of potential candidates.

But, David Ruder, thank you very much.

The former chairman of the SEC in Chicago.

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