Seat

DEFINITION of 'Seat'

Seat refers to membership on a stock exchange, which enables a person to trade on the floor of the exchange, either as an agent for someone else, a floor broker, or for one's own personal account, a floor trader. In the industry, owning a seat on an exchange was long considered a prestigious position, open only to a lucky and wealthy few. It was most commonly used to refer to membership on the New York Stock Exchange, in a structure that ceased to exist when it became a publicly traded company.

BREAKING DOWN 'Seat'

Seat is an expression that came into use with respect to membership on the NYSE because each trader or broker was assigned a chair in the hall where trading took place, with each stock individually called to trade. The exchange moved to a system of continuous trading in 1871, as trading boomed in the years following the Civil War, and the term ceased to have the literal meaning of a chair from which to trade.

Background

The history of the New York Stock Exchange dates back to 1792, when 24 businessmen signed the Buttonwood Agreement under a tree on Wall Street in Manhattan, and agreed on basic ground rules for trading stocks. The New York Stock and Exchange Board was formed in 1817. In 1868, the exchange fixed the number of seats at 1,060, which was later increased to 1,100. Also in 1868, a seat became a property that could be bought and sold. Prices were as low as $4,000 at the time. The price of a seat in mid-1929 hit $625,000 shortly before the crash. The price fell to $68,000 in 1932 and to $17,000 in 1942. The price reached a high of $3.25 million in 2005. The rules were again modified in the late 1970s, when members were first allowed to lease their seats to qualified nonmembers.

The End of the Seat

In 2007, trading became entirely electronic, and NYSE merged with Euronext to increase the range of traded products. Members received $500,000 and 77,000 shares in the new, publicly traded company. The concept of a seat ceased to exist, and the right to trade on the exchange required only a one-year license. The license cannot be resold, but ownership of the license can be transferred if the company that owns it is sold. NYSE was bought by the Intercontinental Exchange, known as ICE, in November 2013 for $10.1 billion. With virtually all trading done via computer, the floor of the exchange became a relic, with only a few remaining traders working on it.

RELATED TERMS
  1. Member Firm

    A broker-dealer in which at least one of the principal officers ...
  2. ABC Agreement

    An agreement made between a purchasing member with a seat on ...
  3. Trading Floor

    The floor where trading activities are conducted. Trading floors ...
  4. New York Stock Exchange - NYSE

    A stock exchange based in New York City, which is considered ...
  5. Member

    1. In the most general context, a brokerage firm (or broker) ...
  6. Floor Trader - FT

    An exchange member who executes transactions from the floor of ...
Related Articles
  1. Markets

    Stocks Basics: How Stocks Trade

    Most stocks are traded on exchanges, which are places where buyers and sellers meet and decide on a price. Some exchanges are physical locations where transactions are carried out on a trading ...
  2. Investing

    Learn About the New York Stock Exchange

    The New York Stock Exchange (NYSE) is nicknamed the “Big Board,” and for good reason. It’s the largest, oldest and best-known stock exchange in the world.
  3. Markets

    Who Owns The Stock Exchanges?

    As M&A heats up among the exchanges, here's how the market currently looks.
  4. Investing

    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.
  5. Markets

    The Birth Of Stock Exchanges

    Learn how British coffeehouses helped give rise to the juggernaut that is the NYSE.
  6. Markets

    Stock Exchanges: A Global Tour

    Check out the history and inner workings of the world's six most well-known stock exchanges.
  7. Investing

    What's an Exchange?

    An exchange is an organized marketplace where securities and other financial instruments are traded.
  8. Insights

    The Most Expensive Sports Tickets

    These days, sports fans need deep pockets in order to watch their favorite teams. These are some of the highest-priced tickets in the field.
  9. Markets

    How The NYSE Makes Money

    We examine how the New York Stock Exchange, the leading US stock exchange, makes money.
  10. Personal Finance

    Why You Might Want a Seat That’s Worse Than Economy

    Surprise: The new basic economy airline ticket, dubbed “last class” by critics, might actually be worth the price. Here’s why.
RELATED FAQS
  1. What is an ABC Agreement?

    Brokerage and other financial organizations usually purchase seats or memberships at the New York Stock Exchange (NYSE) for ... Read Answer >>
  2. Why are traders on the floor of the exchange?

    Before the advent of electronic trading platforms, the floor of the stock exchange was the location for market transactions ... Read Answer >>
  3. What are all of the securities markets in the U.S.A?

    There are three major U.S. financial securities markets which are: New York Stock Exchange (NYSE): NYSE is a stock exchange ... Read Answer >>
  4. What does it mean when my broker says that shares are for auction?

    An auction market is one in which stock buyers enter competitive bids and stock sellers enter competitive offers at the same ... Read Answer >>
  5. What are the historical beginnings of the securities industry?

    Learn the history of securities trading, beginning in 12th century France and leading to world financial market centers in ... Read Answer >>
  6. What are the advantages and disadvantages of listing on the Nasdaq versus other stock ...

    Discover some of the primary advantages and disadvantages that exist for companies listed on the Nasdaq exchange rather than ... Read Answer >>
Hot Definitions
  1. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  2. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  3. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  4. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  5. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
  6. Enterprise Value (EV)

    A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is ...
Trading Center