A:

Owning a seat on the New York Stock Exchange (NYSE) enables a person to trade on the floor of the exchange, either as an agent for someone else (floor broker) or for one's own personal account (floor trader). Prices for seats on the exchange are determined by supply and demand, and they have ranged from $4,000 to over $2,500,000.

However, to own a seat, a trader or broker must meet more criteria than simply being able to afford it. Prospective owners of the seats must go through a stringent review process and, once accepted, they are required to maintain high levels of compliance and ethics as the NYSE and governmental regulators constantly review members.

The phrase "owning a seat on the exchange" actually has very literal origins. Up until 1871, trading on the exchange was done in a "call market" fashion, which is a system by which only one company's stock trades across the whole exchange at any one time. Trading members would sit in the assigned seats they owned and participate in the buying and selling of desired stocks as they were called for trading. After 1871, the trading of stocks became simultaneous and the floor trading that we're accustomed to today became the norm.

(For more about trading, read Getting To Know Stock Exchanges and Brokers And Online Trading Tutorial.)

RELATED FAQS

  1. What is the average range for the price-to-earnings ratio in the electronics sector?

    Understand the difference between the primary market and the secondary market, and learn which investors are able to participate ...
  2. What are the benefits and shortfalls of the Herfindahl-Hirschman Index?

    Learn about the differences between equity and debt financing and how they impact financials. Find out how businesses determine ...
  3. What is the difference between open interest and volume?

    Learn more about options, what options' volume and open interest are and the difference between volume and open interest ...
  4. What is the difference between notional value and market value?

    Learn more about the notional and market value, how to calculate the notional value of a futures contract and the difference ...
RELATED TERMS
  1. Market Value

    The price an asset would fetch in the marketplace. Market value ...
  2. Bulldog Market

    A nickname for the foreign bond market of the United Kingdom. ...
  3. Float Shrink

    A reduction in the number of a publicly traded company’s shares ...
  4. Capital Strike

    A refusal of businesses to invest in a particular sector of the ...
  5. Gray Market

    An unofficial market where securities are traded. Gray (or “grey”) ...
  6. Floating Stock

    The number of shares available for trading of a particular stock.

You May Also Like

Related Articles
  1. Investing

    How Nasdaq Makes Money

  2. Investing

    How The NYSE Makes Money

  3. Fundamental Analysis

    What are some examples of Cash Flow ...

  4. Mutual Funds & ETFs

    Which ETF is the Best Bet: VTI or IWV?

  5. Trading Strategies

    Risk Management Techniques For Shorting ...

Trading Center