ABC Agreement

AAA

DEFINITION of 'ABC Agreement'

An agreement made between a purchasing member with a seat on the NYSE and the firm in which he or she works. With the approval of the NYSE, this agreement stipulates that the employee of the firm may:

a) transfer the seat to another employee of the firm
b) retain ownership and purchase a new seat for another individual designated by the firm
c) sell the seat and transfer any gains to the firm.

INVESTOPEDIA EXPLAINS 'ABC Agreement'

ABC agreements are important because the firm pays for the seat on the NYSE that the employee is using. As such, the firm wishes to insure itself against the possibility of the employee - should he or she no longer work for the firm - negatively impacting the firm's ability to trade on the NYSE.

The ABC agreement is so named because of the three main provisions it allows. Similar types of arrangements exist between firms and their employees on various other exchanges.

RELATED TERMS
  1. Member

    1. In the most general context, a brokerage firm (or broker) ...
  2. Member Firm

    A broker-dealer in which at least one of the principal officers ...
  3. New York Stock Exchange - NYSE

    A stock exchange based in New York City, which is considered ...
  4. Market Value

    The price an asset would fetch in the marketplace. Market value ...
  5. Acquisition

    A corporate action in which a company buys most, if not all, ...
  6. International Finance Corporation

    The International Finance Corporation is an organization dedicated ...
Related Articles
  1. Options & Futures

    Getting To Know The Stock Exchanges

    Here are the answers to all the questions you have about stock exchanges but are too afraid to ask!
  2. Options & Futures

    The NYSE And Nasdaq: How They Work

    Learn some of the important differences in the way these exchanges operate and the securities that trade on them.
  3. Investing Basics

    What assets are most risky and what assets are safest?

    Learn about the safest and riskiest assets to invest in. Explore savings accounts, T-bills, certificates of deposit, equities and derivatives.
  4. Investing Basics

    How do regulators ensure that markets are conducted at arm's length?

    Learn about arm's length transactions and how the Investment Advisers Act allows stockbrokers to sell securities based on suitability reviews.
  5. Investing Basics

    Are there any pure arm's-length markets?

    Learn about arm's length markets and transactions. Explore situations when different market participants may not be at arm's length.
  6. Options & Futures

    What is the difference between a short position and a short sale?

    Learn how short selling and short positioning are different, specifically in regards to the nature of the commodity being bought and sold.
  7. Fundamental Analysis

    Why would I need to know how many outstanding shares the shareholders have?

    Find out why shareholders should know how many outstanding shares have been issued by a corporation, and learn what happens when more shares are issued.
  8. Economics

    Where do funds report their r-squared?

    Learn where to find R-squared calculations for mutual funds. Explore R-squared, Alpha and Beta and how these calculations measure securities' performance.
  9. Technical Indicators

    How do quant traders build the relative strength index (RSI) into their algorithms?

    Learn how quantitative traders build the relative strength index (RSI) into their algorithms. Explore how automated trading systems are programmed.
  10. Technical Indicators

    What are some historical examples of the relative strength index (RSI)?

    Learn about the relative strength index (RSI) and overbought and oversold readings. Explore historic examples when RSI readings were oversold and shares rallied.

You May Also Like

Hot Definitions
  1. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  2. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  3. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  4. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  5. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  6. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
Trading Center