A seat on the New York Stock Exchange represent both an equity interest in the Exchange as well as the right to access the trading facilities of the market.
A Membership on the NYSE is traditionally referred to as a 'seat' because in the early year of its existence, Members sat in assigned chairs in the hall where the Exchange’s daily roll call of stocks was conducted.
After a post-Civil War boom in stock trading, the Exchange adopted a system of continuous trading, replacing calls of stocks at set times with simultaneous trading of all listed stocks on a large open trading floor.
The term 'seat' lost its literal meaning with the advent of
continuous trading in 1871, long before the virtual world would make the
idea of any fixed location hopelessly outdated. In those days, stock
trades were conducted at trading posts on a large open floor. Owning or
leasing a seat on the Exchange enabled qualified and licensed
professionals to buy and sell securities on the floor.
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In 1868 the Exchange established a fixed number of Memberships and revised its rules to allow Members to sell their seats. After selling for as little as $4,000 in the late 1860s and early 1870s, Memberships reached $80,000 by the turn of the century, reaching a high of $625,000 during the bull market of 1929 before reaching new highs of over $1 million during the 1980s stock market boom.
In 1990, a seat sold for $250,000. The highest price ever paid for a seat was $4 million on Dec. 1, 2005, followed by several seat sales at the same price.
Since the late 1970s, NYSE Members have been permitted to lease seats and their assigned trading rights to qualified individuals.
At the close of the market on December 30, 2005, member seat sales on the New York Stock Exchange officially ended, in anticipation of the NYSE’s plans to become a publicly traded company by way of merger with Archipelago Holdings Inc.
In 2005, NYSE seat prices had reached an historic high, quadrupling from a low of $975,000 on Jan. 11 to reach a new all-time high of $4 million in early December, that is an increase of 310%! Those good times were not to last.
On Wednesday, Jan. 4, 2006, the NYSE conducted a Dutch auction for trading licenses. This gave Members and Member organizations the right to access the trading facilities of the NYSE market.
In changes made in 2010 it became possible once again for traders to sit next to each other as they once had.
Of course, one of the most important events in the New York Stock Exchange history happened in 1929 when the 'Great Depression' and stock market crash occured. It is a subject about which I have done quite a lot of reading and find fascinating. If you plan to understand crowd behaviour or human psychology, it is simply unmissable!
Stock prices fell sharply on October 24 1929, Black Thursday, with record volume of nearly 13 million shares. Five days later, the market crashes on volume of over 16 million shares which is a level not to be surpassed for 39 years.
On September 3 1929, the Dow Jones Industrial Average reaches its 1929 peak of 381.17.
On October 29, Black Tuesday, prices fall sharply and the stock market crashes. This crash produces a record volume of nearly 16 million shares. The Dow Jones Industrial Average falls more than 11 percent.
It is always worth remembering that most of the 'big days' on a stock exchange are when prices fall quickly and there is a panic. The dot com bubble bursting and the days around the September 11th attacks were important days in the New York stock exchange history, but this overlooks all the other quieter days when markets just ticked upwards slightly and life went on as normal. Days like the flash crash in May 2010 leave a much larger mark in the memory than most others.
To read and learn more about the New York stock exchange and it's workings, please visit the following pages: