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The New York Stock Exchange’s inaugural “SEATS” (Stock Exchange Auction Trading System) auction produced 1,274 successful bids by Member Organizations for trading licenses at an annual price of $49,290 each, the minimum bid accepted by the Exchange in order to maximize participation and access to the NYSE’s outstanding pool of liquidity for the world’s leading companies. The number of trading licenses sold exceeds the current number of seats actively being used for trading in the NYSE Market today. The licenses will become valid following the close of the Exchange’s merger with Archipelago Holdings, Inc. (PCX:AX) which is expected later this quarter.
The actual price for 2006 trading licenses will be pro-rated for the amount of time remaining in the year at the closing of the merger. The Exchange will allow Member Organizations that wish to purchase trading licenses following the auction to do so throughout the year at a pro-rated annual rate of $54,219, which is 10% above the auction price, until 1,366 licenses have been issued.
The SEATS auction, a modified Dutch auction, required Member Organizations to submit bids before 12 noon on Tuesday, January 3 for the right to directly access the post-merger NYSE Market. Bidders had the option of submitting “market bids” to guarantee acquisition of a trading license at the clearing price or “priced bids” which helped establish the fair value of the 2006 trading license.
For the 2006 SEATS auction, the NYSE established a maximum bid price for each trading license of $73,935, which is a 20% premium to the average annual lease price for seat leases commenced during the six-month period ending October 30, 2005, and the $49,290 minimum bid price which corresponds to a 20% discount to the average annual lease price for leases commenced during the same period. The Exchange expects to generate over $60 million in new revenue on an annualized basis from the sale of trading licenses, adding to the diversification of its income.
The NYSE/Archipelago merger, the largest ever among stock exchanges, will join into a single company the world's largest equities market and the first open, all-electronic stock market in the United States. The newly created NYSE Group will be a leading, global multi-product marketplace positioned for future growth, value creation and competitive positioning on a worldwide basis.
The NYSE’s public website provides complete descriptions of the trading-license process at www.nyse.com/tradinglicense.
NYSE Trading License Facts
- Each trading license will entitle its Member organization holder to physical and electronic access to the NYSE trading facilities, subject to limitations and requirements specified in Exchange rules.
- Only Member Organizations in good standing are permitted to obtain trading licenses.
- Each trading license will include the right to designate an individual who may represent the Member Organization on the NYSE trading floor, subject to approval by NYSE Regulation.
- Trading licenses are generally non-transferable, although a Member Organization, with Exchange approval, may transfer a trading license to a qualified and approved Member Organization that is an affiliate or a successor to the Member Organization.
- A Member Organization may surrender a trading license prior to the expiration of its term in accordance with applicable rules—which require payment of a penalty equivalent to one month’s installment of the trading-license fee.
