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 member firm is a brokerage firm that holds at least one membership ...
  2. New York Stock Exchange - NYSE

    The New York Stock Exchange, located in New York City, is considered ...
  3. Exchange

    An exchange is a marketplace in which securities, commodities, ...
  4. Member

    A member is a brokerage firm (or broker) holding membership on ...
  5. Floor

    The lowest acceptable limit as restricted by controlling parties. ...
  6. Pork Chop

    Pork chop refers to an arrangement whereby NYSE employees cover ...
Related Articles
  1. Personal Finance

    Get a More Comfortable Seat in Coach for Less

    Try these four strategies to get a better seat in economy class the next time you fly.
  2. Trading

    The Death Of The Trading Floor

    Electronic trading has almost completely replaced face-to-face human trading.
  3. Insights

    The Birth of Stock Exchanges

    Learn about the evolution of stock exchanges, from the Venetian states to the British coffeehouses, and finally to the NYSE.
  4. Investing

    Stock Exchanges Around The World

    We tell you about five of the most popular stock exchanges from around the globe.
  5. Investing

    How Nasdaq Continues To Innovate

    For centuries, a stock market was a physical arena where buyers and sellers traded shares. Then the NASDAQ opened and changed everything.
  6. Trading

    Electronic Trading Tutorial

    Learn about the systems that run the market.
  7. Managing Wealth

    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.
RELATED FAQS
  1. What does a New York Stock Exchange membership entail, and why is it known as 'owning ...

    Owning a seat on the NYSE enables a person to trade on the floor of the exchange, either as an agent for someone else or ... Read Answer >>
  2. Why are traders on the floor of the exchange?

    Learn how trading on the floor of the stock exchange has evolved over time with computers now managing the majority of buying, ... Read Answer >>
  3. What are all of the securities markets in the U.S.A?

    Learn about the major and somewhat lesser-known U.S. financial securities markets. Read Answer >>
  4. How do I invest in the Nasdaq or the NYSE? Is it even possible? Would I want to? ...

    The Nasdaq and the NYSE are stock exchanges that trade securities. Nasdaq stands for National Association of Securities Dealers ... Read Answer >>
  5. Can stocks be traded on more than one exchange?

    A stock can trade on any exchange on which it is listed. A company can list its shares on more than one exchange, in a dual ... Read Answer >>
  6. What is the history of futures?

    Explore the history of futures trading and the origin of the major commodity futures trading exchanges in England and the ... Read Answer >>
Hot Definitions
  1. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
  2. Relative Strength Index - RSI

    Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent ...
  3. Dividend

    A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
  4. Inventory Turnover

    Inventory turnover is a ratio showing how many times a company has sold and replaces inventory over a period.
  5. Watchlist

    A watchlist is list of securities being monitored for potential trading or investing opportunities.
  6. Hedge Fund

    A hedge fund is an aggressively managed portfolio of investments that uses leveraged, long, short and derivative positions.
Trading Center