What Is an Admission Board?
An admissions board comprises representatives of a particular stock exchange who determine whether a company will be allowed to list its shares on that exchange. An exchange's admission board establishes the exchange's listing requirements, ensures that listed stocks comply with those requirements, and makes decisions about when a stock should be delisted.
- The admission board is the gatekeeper for a stock exchange, in charge of deciding which companies can list on the exchange, and what the rules are for listing.
- Typically a board will request several years of financial statements, a prospectus, a minimum total market value, a certain number of shares outstanding, and a minimum share price.
- The board's rules must comply with securities regulations determined by government regulatory agencies, such as the Securities and Exchange Commission (SEC).
- Top-level executives from major companies—including CEOs, CFOs, partners, and others—typically comprise an exchange's admission board.
Understanding Admission Boards
An admission board's requirements for listed companies may include: the submission of two to three previous years' worth of financial statements, the issuance of a prospectus, and the meeting or exceeding of minimum requirements for total market value, number of shares outstanding, and share price.
The board's guidelines and decisions must comply with securities regulations established by the government. An exchange's admission board generally consists of high-level executives such as CEOs, CFOs, directors, vice presidents, and partners from a variety of major companies.
The First Admission Board in America
Amid the drama of the 1792 market crash, what would become the first "admission board" for a stock exchange met under a buttonwood tree at 68 Wall Street (as legend has it) and pledged to deal primarily among themselves and to honor minimum commission rates.
On March 8, 1817, a group that included four of the original signers of the Buttonwood Agreement created an organization called the "New York Stock and Exchange Board," informally known as the "Board of Brokers." The Board of Brokers patterned their constitution on that of the Philadelphia Exchange with seventeen rules that governed trading, provided for admission and discipline of members, and sought to tighten their control over the industry.
At this original exchange, the president sat before the members and "called the stocks." Members were required to attend all auction sessions, provided for one-day delivery of securities, and forbade "fictitious trades," such as matched orders or wash sales, commonly used to imitate genuine trading activity and stimulate outside investment. Penalties imposed for violations of these rules ranged from fines to suspension and expulsion.
From the start, admission standards stated that members had to have practiced in the city for at least a year. In 1820, initiation fees were imposed to provide evidence that a trader could make good on losses. All new members were elected by the full membership, with one blackball sufficient to keep a questionable applicant out. The Board of Brokers also sought some control over the industry at large, screening listed securities and identifying unscrupulous traders in a "black book."