Nov. 15 (Bloomberg) -- Merrill Lynch & Co.'s new Chief Executive Officer John Thain said price drops in the mortgage- securities market may create ``great opportunities'' and plans to hire senior managers to bolster the trading division.

``On the sales and trading side, we probably are going to add some senior management to help,'' Thain said today in an interview one day after being named to lead the 93-year-old securities firm. ``There is plenty of talent on Wall Street right now and I'm already getting plenty of resumes.''

Thain, now head of New York-based NYSE Euronext, takes over Merrill Dec. 1, replacing former CEO Stan O'Neal, who was ousted after delivering a $2.24 billion third-quarter loss. Writedowns on mortgage-related investments and corporate loans have already cost the world's biggest brokerage $8.4 billion, and another $10 billion in losses may be in the offing, according to Deutsche Bank AG analyst Michael Mayo.

O'Neal transformed Merrill into the biggest underwriter of collateralized debt obligations, a kind of security known as CDOs whose prices have tumbled because many were tied to subprime mortgages. The firm was left holding $15.2 billion of unhedged CDOs as of Sept. 30. Merrill also had $5.7 billion of additional ``subprime-related exposures,'' including loans, according to a regulatory filing.

`Key is Risk Management'

Thain, 52, said that as part of his ``due diligence'' before accepting the job he examined the firm's mortgage portfolio. Merrill was ``completely open'' in allowing the review, he said.

``The whole key is risk management, so what I need to do is a revamping and re-looking at the risk management system and what seems to have gone wrong,'' Thain said. ``There's still downward pressure in the CDO market and in the subprime market. That will present opportunities probably over the next six to 12 months.''

Merrill fell 68 cents, or 1.2 percent, to $57.30 at 4:26 p.m. in New York Stock Exchange composite trading. Shares of NYSE Euronext fell $2.82, or 3.3 percent, to $83.92. The stock has declined 14 percent this year.

Thain said that one of his top priorities will be addressing how Merrill awards bonuses to its employees. He also intends to meet with brokers from the firm.

``You have to pay the people who are doing well and you can't penalize them because of the problems in one particular area,'' Thain said. ``Bonuses are actually a very important question and one that I've already started to talk to them about.''

Transforming the Exchange

During his almost four-year tenure at the New York Stock Exchange, Thain orchestrated one of the biggest transformations in its 215-year history. In his first year, Thain unveiled plans for one of the most sweeping overhauls of the Big Board's trading system in three decades.

By April 2005, he had hammered out an agreement to purchase Archipelago Holdings Inc., transforming the exchange into a for- profit company. A year later he was negotiating the $14.4 billion purchase of Paris-based Euronext NV, a deal that created the first trans-Atlantic stock exchange.

Merrill's stock is the worst performer this year of the five biggest U.S. securities firms. Its 38 percent plunge has erased more than $30 billion of market value. Standard & Poor's, Moody's Investors Service and Fitch Ratings have cut Merrill's debt rating and are considering further downgrades.

`Significant Challenges'

``They face significant challenges, but John is not rattled and he will be a calming influence on the organization,'' said Herbert Allison, the former Merrill Lynch & Co. president who is now chairman of the $428 billion pension fund TIAA-CREF. ``He will approach these issues very deliberately and very directly. That will gain a lot of confidence.''

Allison served on the board of the NYSE from June 2003 to August 2005 and worked at Merrill for 26 years until 1999.

Merrill is a passive minority investor in Bloomberg LP, the parent of Bloomberg News.

To contact the reporter on this story: Edgar Ortega in New York at ebarrales@bloomberg.net.

Last Updated: November 15, 2007 19:03 EST