New York Stock Exchange (NYSE) chairman Richard Grasso has resigned amid public anger over his $140m pay package.
Mr Grasso insists he never sought a higher salary
Mr Grasso has been under mounting pressure to go since details of his benefits and incentives package were revealed by the NYSE last month.
Attempts to find a swift replacement for Mr Grasso foundered on Wednesday night when California lawyer Larry Sonsini turned down the job of interim chairman, Reuters news agency reported.
Instead, NYSE's board has named existing board member Carl McCall as its lead director.
Although large salaries are a way of life on Wall Street, the sheer scale of Mr Grasso's deal raised questions about potential conflicts of interest.
US regulators wanted to know how Mr Grasso could be paid so much by the very organisation he was meant to be regulating.
The New York exchange is also under pressure to take the lead on corporate governance after financial scandals such as Worldcom and Enron.
Mr Grasso tendered his resignation at an emergency board meeting.
"Dick offered to submit his resignation if the board requested, and the board did so and accepted that resignation," said Mr McCall, who chaired the meeting.
"Every single director on our conversation discussed the great job that Dick has done as chairman and chief executive," Mr McCall added.
In a statement, Mr Grasso said: "For the past 36 years, I have had the honour and privilege of working for what I believe is the greatest equities market in the world - the New York Stock Exchange.
"Today, I shared with the board of directors in a conference call that, with the deepest reluctance and if the board so desired, I would submit my resignation as chairman and chief executive officer."
He added: "I believe this course is in the best interests of both the Exchange and myself."
New York's state comptroller Alan Hevesi. who has led calls for Mr Grasso's resignation, said it was "best for the New York stock exchange".
But Mr Hevesi, who is the trustee of New York state's $105bn pension fund, said the issue of trust in the financial system stretched beyond Mr Grasso.
"The issue is making fundamental reforms at the Stock Exchange to restore investor confidence.
"The issue is also to establish a model for the entire financial community of good corporate governance, accountability and disclosure.
"Now that Mr. Grasso has stepped down, we can move forward with those reforms," he said in a statement.
Mr Grasso, who started on the trading floor of the NYSE and was the first chairman to be elected from its ranks, received much credit for increasing the number of listings on the exchange.
He was also praised for getting trading started again after 11 September - for which he is reported to have received a bonus of $5m.
Mr Grasso insisted he did nothing to influence his pay.
But news of the $140m package of accrued savings, benefits and incentives he was due to receive led to resentment among traders.
The additional news that Mr Grasso had forgone an additional $48m he was entitled to failed to diffuse the row.
Brokerage firms and traders were also thought to be unhappy at escalating NYSE fees.
And some of America's biggest pension funds also expressed concern, even hinting they may switch their business to other trading systems.
All that - coupled with a new mood of corporate probity in the US - made Mr Grasso's position increasingly untenable.
The campaign to oust Mr Grasso took on a political dimension in the past 24 hours, with Democratic senator and presidential candidate Joseph Lieberman calling for his resignation.
"Instead of setting an example of ethical leadership for the market he oversees, Mr Grasso's behaviour has shaken the faith of investors and the foundation of the stock exchange," he said.
The US Securities and Exchange Commission (SEC), which is investigating the pay deal, also requested more information on the package.
"We will be asking the NYSE some further questions, based on information we've received," SEC Chairman William Donaldson told a House of Representatives Financial Services Committee hearing.