Governance reform gathers more momentum.

• Author: Livingston, Phil
• Position: President's Page - New York Stock Exchange and Nasdaq propose rules - Brief Article - Editorial

As we all know, Congress has been debating a series of possible reforms covering the accounting profession and financial reporting. If Congress doesn't act, the SEC is laying the groundwork for a Public Accounting Board that would oversee the auditing profession. Of course, this wouldn't be any panacea for accounting and reporting problems, but if the board is made up of business experts outside the Final Four firms, it might help restore some credibility to the reporting process.

In the meantime, though, we can applaud the actions of some bodies outside government -- the stock exchanges and The Business Roundtable, the organization representing top CEOs from around the country. Both the New York Stock Exchange and Nasdaq have issued a package of proposed rules for their listed companies that would bring substantive change and create a kind of best-practices standard for much of corporate America.

The NYSE's recommendations from its Corporate Accountability and Listing Standards Committee were announced in early June, and FEI has listed them -- and a comparison to existing standards -- on our Web site: www.nyse.com/press/press.html. The committee report also makes recommendations to Congress and the Securities and Exchange Commission on various policy and regulatory matters.

These recommendations are really quite significant. They include:

* Increasing the role and authority of independent directors.

* Tightening the definition of "independent" director and adding new audit committee qualifications.

* Requiring that the audit committee chairman have financial experience.

* Encouraging a focus on good corporate governance.

* Giving shareholders more opportunity to monitor and participate in the governance of their companies.

* Establishing new control and enforcement mechanisms.

* Improving the education and training of directors.

According to the NYSE, the committee will be seeking public comments on its recommendations, then seeking final approval of the report at the NYSE Board of Directors' Aug. 1 meeting. I encourage members to offer their comments on these far-reaching governance proposals.

Meanwhile, Nasdaq has filed a number of major rule changes with the SEC and will be taking comments on them as well. These changes, which could be implemented for Nasdaq companies later this summer, are similar in concept to those from the NYSE, but in...