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How To Be A Member Of The NY Stock Exchange?

It makes sense that there are specific requirements in order to become a member of the stock exchange including brokerage dealer registration and purchasing a trading license. Over the decades how to become a member of the NY stock exchange has been a complete mystery to many and still is today. The origins of New Your Stock market dates all the way back to 1792 but it first opened for trading in a permanent building on January 4, 1865.

“Owning a seat on the exchange” really was an actual seat on the exchange floor. When the market opened it was considered a call market where only company traders could conduct business on behalf of the company.

Traders would sit in assigned and owned company seats while buying and selling stocks as each was individual called for trading. This continued up until the year 1871 when the floor was opened to simultaneous continuous trading from open of the exchange until closing, much like what we see today. Although today’s market has evolved and many trades are processed electronically off the floor.

The NY stock exchange was a private enterprise until 2005 when it became a public entity. As a result of a merger in 2007 with the European exchange it is now called NYSE Euronext. The use of technological advancements on the trading floor has led to the open cry system giving way to electronic trading. Fortunately for the nostalgic among us you can still see traders on the floor setting prices and dealing in high volume institutional trading.

The NYSE stock exchange is not open to individual investors. In order to obtain membership the first step requires a firm to be a registered or new US based broker dealer who obtains a (SRO). SRO stands for Self-Regulatory Organization and must have an established connection with a clearing firm. A Non FINRA member firm must be a member of a SRO in order to be eligible for exchange membership.

The advantage to this process is that when a registered broker dealer firm becomes a NYSE member they receive reciprocity membership on the NYSE market for equities as well and the reverse is also applicable. It therefore does not matter which membership application a firm choices to process. Member Broker Dealer Firms when approved are members of both markets.

Next the registered broker dealer must fill out relevant market specific NYSE or NYSE MKT equities forms for processing by the exchange client relationship services and pay all associated fees. Financial Industry Regulatory Authority (FINRA) approved firms can fill out the forms and pay for a trading license. Non FINRA firms can fill out the application and purchase a trading license, but must also have a membership with a SRO.

The new trading model establishes these specific participants. They are called designated market members (DMMs), trading floor brokers, Supplemental liquidity providers, and retail liquidity providers. DMMs are required to meet strict NYSE Euronext depth and continuity standards to maintain their respective member position.

Today’s Trading Floor Brokers utilize state of the art technology and order management tools.

NYSE Euronext membership provides their broker dealers with the technological state of art tools that they need to make rapid trades. Membership can also bring brand visibility and direct connectivity. The NY Stock Market has undergone many changes over its long illustrious history.

Becoming a member of the NY Stock Exchange requires a firm to fill out a registered brokerage dealer firm application. Not every brokerage is eligible; firms that conduct a floor business or a customer public dealing business are not eligible for membership at the NYSE Euronext. Being a member firm comes with the responsibility of upholding the standards of the Financial Industry Regulatory Authority. In either case, there’s always more to learn about becoming a member of the New York Stock Exchange on the world wide web.

Peter Christopher

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