Marshall N. Carter, former chairman and chief executive officer of State Street Corp. (STT), is the top candidate to become chairman of the New York Stock Exchange (search), according to sources close to the situation.

Two people at the NYSE, speaking on condition of anonymity, told The Associated Press that Carter was the board's top choice to succeed John Reed, the former co-CEO of Citigroup Inc. (C). Carter, a member of the NYSE board since 2003, made the rounds of the stock exchange floor Wednesday, greeting members and floor traders, the sources said.

A call to Carter's Harvard University office, where he is a senior fellow at the John F. Kennedy School of Government (search), was not immediately returned. NYSE spokesman Raymond Pellecchia said he had no comment.

The NYSE board of directors was scheduled to meet Thursday afternoon to vote on a new chairman. An announcement on the new chairman was expected after a meeting with the Big Board's membership after Thursday's trading session.

Carter, 64, would bring a great deal of experience to the job, not all of which stems from his 25 years in finance. A decorated Marine officer wounded in combat in Vietnam, Carter has also been a White House Fellow and has headed a government task force dealing with global securities. His contacts in Washington also make Carter a strong candidate as the Securities and Exchange Commission (search) prepares to implement new regulations governing stock trading approved on Wednesday.

The NYSE board was also expected to approve three new board members: former Maryland securities commissioner Ellyn L. Brown, former Clinton administration budget director Alice M. Rivlin and Karl von der Hayden, former vice chairman and chief financial officer of PepsiCo Inc. (PEP).

Current directors seeking a new one-year term include Carter, Herbert M. Allison Jr., Shirley Ann Jackson, James S. McDonald, Robert B. Shapiro, Dennis Weatherstone and Edgar S. Woolard. Two current directors — Reed and former Secretary of State Madeleine K. Albright — are not seeking new terms.

The NYSE's constitution, revamped in late 2003, calls for a board of anywhere from six to 12 people. The board would expand from nine to 10 members should the entire slate be elected. The private, not-for-profit NYSE is owned by its 1,366 seat holders, who voted on the board candidates by proxy prior to the board meeting.

Reed became chairman of the NYSE in September 2003 after former Chairman and CEO Richard Grasso (search) resigned following the revelation of his $187.5 million pay package, which drew intense criticism over its size and scope. In May 2004, Grasso was sued by New York Attorney General Eliot Spitzer, who sought to return at least $100 million to the NYSE; the court battle continues today.

Reed, who started as an interim chairman and then agreed to a one-year term, oversaw the hiring of current NYSE CEO John Thain (search) and guided the board through the Grasso crisis. Over the past 18 months, the exchange has moved to increase its capacity for electronic stock trading to better compete with the Nasdaq Stock Market and other electronic markets. The NYSE also successfully lobbied the SEC for a national market system overhaul that protected the exchange as it makes the transition to more electronic trading.