The markets can help the nation emerge from the current financial crisis by providing transparency for secretive investments that helped fuel the disaster, but the government needs to put better rules in place to make that happen, the head of the Nasdaq stock market said Thursday.

Nasdaq OMX Group Inc. Chief Executive Bob Greifeld noted a recent stream of business leaders trooping to the capital to explain what went wrong and offered his prescriptions.

"If we fix these markets, we will create a better foundation" for President-elect Barack Obama's economic stimulus plan, Greifeld said in a speech at the National Press Club. "We believe in the need to jump-start the economy but we should not turn up the heat on an oven that is broken."

That means Congress and the new administration will need to "fundamentally rethink" the system of regulation of the financial markets, he said, aiming to put new rules on the books that are smarter and more efficient.

The regulatory failure of the Securities and Exchange Commission in regard to the Bernard Madoff affair is a case in point, Greifeld said. The agency failed to uncover Madoff's alleged $50 billion fraud because its priorities were misdirected, and it ended up "policing obscure business issues while investors fell prey to schemes such as those of Madoff," he said.

The SEC "was not an agency that was focused on fundamental or systemic risk in the financial markets," said Greifeld.