Rising NYSE Seat Prices May Mean Trading Volume Increase

The “fire sale” at the New York Stock Exchange is over.

Seats carrying the rights to trade stocks on the Big Board could be had in the weeks after stock prices collapsed in October at prices of virtually 2-for-1 in comparison to pre-crash levels.

A seat on the prestigious NYSE now sells for $800,000. That’s down from the $1.15 million just before Oct. 19 but up significantly from the “fire sale” level of $625,000 in late October.

Some analysts said the higher trend in seat prices on the New York Stock Exchange and others around the country could signal improved volume, now running 10% to 15% behind last year’s levels.

Demand for seats indicates that brokers and other professionals are gearing up for heavier trading, which would spin off more commissions and fees.

But others say having a seat on an organized exchange is not as important as it used to be, and they would not be surprised if seat prices fail to return to the old levels.

“The Street has got to be losing a lot of money on (its) bread-and-butter business,” said an executive of a large firm, referring to the drop-off in trading in stocks and options. He does not expect any significant increase in seat prices from current levels.

Perrin Long, analyst at Lipper Analytical Services, said seat prices usually anticipate the general level of activity on the various exchanges.

‘Not Worth $800,000’

“Normally seat prices peak when the markets are roaring,” Long said. “When there is a belief that business is going to get better, the prices begin to recover.”

While some see light at the end of the tunnel, others say Wall Street may be fooling itself. A trader who owns seats on several exchanges thinks the Big Board is overpriced.

“I don’t think they’re worth $800,000,” he said of the most recent price for seats on the New York Stock Exchange.

The trader, who did not wish to be identified, cited the sluggish volume.

While memberships on exchanges that buy and sell stocks remain depressed, seat prices for commodities are rising, reflecting renewed inflation worries. These include exchanges for agricultural commodities, metals and petroleum.

The price of a seat on the New York Mercantile Exchange, where energy contracts are a major business, set a record Monday at $245,000, up from $235,000.