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Getting a seat on the stock exchange is a very challenging and expensive task. But if they can be obtained, stock exchange seats are major assets for securities brokers. The "seat", which today is really a term for "membership", gives qualified individuals the right to trade directly on the exchange. A person can use a stock exchange seat to personally trade directly on the exchange floor, or she may allow an agent to trade for her. Commissions that a seat owner will charge are set by the exchange.
First, you must wait for a seat to become available. There are a limited number of seats on stock exchanges. In order to obtain a seat, one has to become available due to the death, insolvency or decision to sell by an existing member.
Next, you must obtain the votes necessary from other members of the exchange. These votes are required to become a member of the exchange. There is a strict review process required by people who wish to purchase a seat on a stock exchange. Once they have passed this review, they must abide by a code of ethics and compliance. Seat owners are continuously monitored by the stock exchange itself—and by government regulators. Regulators include FINRA which is a self-regulatory organization, and the Securities and Exchange Commission, which is a federal watchdog agency for the securities industry.
Stock exchange seats must be purchased. The price of a seat on the New York Stock Exchange can be as little as $4,000 and as much as $4,000,000. The price of seats is set by supply and demand and the price tends to fluctuate with the state of the economy. When the economy is booming, seats will sell for more. When the economy is slow, they will sell for less.
In addition to paying for the seat itself, the purchaser must also pay an initiation fee.
Seat owners have the option of leasing out their seat to other people who are qualified to trade stock.
The largest stock exchange is the New York Stock Exchange.
There are many laws and regulations regarding the trading of stock, so anyone wishing to engage in trading on a serious level should proceed cautiously.
Members of a stock exchange will share in the assets and liabilities of the exchange.
Daniel Gruttadaro began writing professionally in 2009. His work appears on Web sites including eHow and Answerbag. Gruttadaro is a licensed attorney in New York. He holds a Juris Doctor from the State University of New York at Buffalo School of Law.
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