Washington ? The head of the Securities and Exchange Commission said Tuesday that the New York Stock Exchange’s combined roles of regulator and competitive business must be questioned as part of a reform process for the NYSE.

The remark by SEC Chairman William Donaldson in congressional testimony was his strongest statement on specific changes for the world’s biggest stock exchange since a crisis erupted in late August over its former chairman’s pay package.

“We are at a stage now, in my view, where we really have to re-examine the locus of the regulatory mechanism” at the NYSE, Donaldson said at a hearing of the Senate Banking Committee.

“I think there are a number of different approaches to this,” Donaldson said, noting that he had discussed the issue in a meeting Monday with John S. Reed, the embattled NYSE’s new temporary leader.

In the aftermath of the corporate scandals and with new allegations surfacing of widespread fraud in the mutual fund industry, senators for the first time showed impatience toward Donaldson over the pace of SEC actions they said were needed to shore up investors’ confidence.

“We’ve got to get this thing up and going,” declared Sen. Paul Sarbanes of Maryland, the panel’s senior Democrat and co-author of last year’s sweeping legislation to combat corporate fraud.

Sarbanes described the SEC as “this perhaps semi-slumbering lion … having been fed a very good meal” when Congress nearly doubled its budget earlier this year.

Donaldson, acknowledging that investor confidence is at a low point, promised: “We’re on the job.”

Regarding the NYSE debacle, Donaldson said the first step is for the exchange “to get at” its structure of governing itself and devise an overhaul plan.

The issue of whether the NYSE’s self-regulatory and enforcement function should be split off from its exchange business has been a key element in the debate over reforming the 200-year-old exchange. About half of the NYSE board’s seats are assigned to executives of large investment banks, floor trading firms and brokerage houses — the very businesses the NYSE is charged with regulating.

On his first day in the job Monday, Reed said he has an open mind about how the NYSE’s board should be structured and is eager to begin reforms. He signaled that he wasn’t rushing to remove Wall Street executives from the 27-member board or scrap its own reform plan outright.

Reed, who met with Donaldson at SEC headquarters, insisted that the exchange’s management practices should be overhauled before the makeup of its board is altered.

He denied a news report that he might seek the removal of Wall Street executives from the board to mitigate potential conflicts of interest. Any changes in board membership “should follow from the governance changes” in how the NYSE conducts itself, Reed said before the two-hour meeting with Donaldson, a former NYSE chairman who has been pushing for reform.

Reed later told reporters at the NYSE that he would focus on getting a new “architecture” of governance in place at the exchange and finding permanent new management — a process he hoped would be over within months.

Reed was drafted by the NYSE board as interim leader after chairman Dick Grasso resigned Sept. 17 amid a public furor over his $187.5 million pay package.

The board’s composition and its vulnerability to conflicts of interest have been frequently cited by critics of the NYSE, and some observers believe it is inevitable that several directors will step down.