Shwab Decides to Sell NYSE Seats - Underscores Growing Obsolescence of Antiquated Open-Outcry
This afternoon Schwab announced that it was selling its three NYSE seats. This decision underscores the growing obsolescence of the "floor-based" stock exchange model. You can read about this here: http://tinyurl.com/6t5qv.
The Wall St. Journal quotes James Angel, an associate professor of finance at Georgetown University, in the story they published regarding the Schwab sale. Angel said Schwab's decision to get rid of its seats points to the fact that brokerage houses don't need to actually own seats anymore. Memberships, which are called seats because exchange members sat in assigned chairs during the 212-year-old NYSE's early years, confer the right to buy and sell stocks on the trading floor. But 'there are plenty of NYSE members who are happy to provide access,' Mr. Angel said.
The professor, a former visiting academic at the NASD says, "It used to be a matter of prestige for a firm to say, 'We're a member of the New York Stock Exchange,' because it meant that you were a real brokerage firm, but brokerage firms don't have to do that anymore. I don't think most customers really care if they're a member or not. They care about the cost of the execution, about the quality of the services they receive."