This Day in the Law
May 17

Buttonwood Agreement Signed, Creating the New York Stock Exchange (1792)

On May 17, 1792, twenty-four stock brokers signed the Buttonwood Agreement, creating the New York Stock Exchange (NYSE).

The Buttonwood Agreement, so named because it was signed under a buttonwood tree on Wall Street, started the New York Stock & Exchange Board, now called the New York Stock Exchange. The agreement was to provide simple guidelines for trading securities. The agreement’s main provisions were 1) the brokers were to deal only with each other, thereby eliminating auctioneers, and 2) the commissions on the securities were to be 0.25%.

Though formed on May 17, 1792, the organization did not draft its constitution until 1817, when it also elected its first president, Anthony Stockholm. Membership on the NYSE has been held as a valuable property since 1868, and it incorporated in 1971. 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 NYX.

Today, the NYSE is the world’s largest stock exchange, and it all began with twenty-four stock brokers under a buttonwood tree.