The Buttonwood Agreement, which took place on May 17, 1792, started the New York Stock & Exchange Board now called the New York Stock Exchange, NYSE. This agreement was signed by twenty-four stock brokers outside of 68 Wall Street New York under a buttonwood tree. The organization drafted its constitution on March 8th, 1817, and named itself the "New York Stock & Exchange Board". In 1863, this name was shortened to its modern form, "New York Stock Exchange". Membership on the NYSE has been held as a valuable property since 1868. Until recently, members could only join by purchasing existing seats, which were limited to a total of 1,366. In April 2006, the NYSE went both electronic and public, by merging with the already publicly traded Archipelago electronic stock exchange. The new merged company is called the NYSE Group, Inc., and the seats of the NYSE translated into shares of stock which are now traded under the ticker symbol NYSE: NYX. That symbol also passed on to NYSE Euronext, the current parent company of the exchange which was formed in 2007 when the NYSE merged with European exchange Euronext.
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In brief, the agreement had two provisions: 1) the brokers were to deal only with each other, thereby eliminating the auctioneers, and 2) the commissions were to be 0.25%. It reads as follows:
| “ | We the Subscribers, Brokers for the Purchase and Sale of the Public Stock, do hereby solemnly promise and pledge ourselves to each other, that we will not buy or sell from this day for any person whatsoever, any kind of Public Stock, at least than one quarter of one percent Commission on the Specie value and that we will give preference to each other in our Negotiations. In Testimony whereof we have set our hands this 17th day of May at New York, 1792.[1] | ” |
The document's physical location is not known. The Virtual Museum and Archive of the History of Financial Regulation (built and administered by the SEC Historical Society does have this imaged at http://sechistorical.org/collection/papers/1790/1792_0517_NYSEButtonwood.pdf.
The twenty-four brokers (also known as, Founding and Subsequent Fathers) who signed the Buttonwood Agreement were (including business location):[2]
The Buttonwood Agreement is honored by the name of the financial markets column in The Economist.
Later in 1793, they conducted their business inside the Tontine Coffee House.[1]