geographic area. There are also several exchanges for trad- ing of options and futures contracts, which well discuss in the options and futures chapters. An exchange provides a facility for its members to trade securities, and only members of the exchange may trade there. Therefore memberships, or seats, on the exchange are valuable assets. The majority of seats are commission broker seats, most of which are owned by the large full-service brokerage firms. The seat entitles the firm to place one of its brokers on the floor of the exchange where he or she can execute trades. The exchange member charges investors for executing trades on their behalf. The commissions that mem- bers can earn through this activity determine the market value of a seat. A seat on the NYSE has sold over the years for as little as $4,000 in 1878, and as much as $2.65 million in 1999. See Table 3.1 for a history of seat prices. The NYSE is by far the largest single exchange. The shares of approximately 3,000 firms trade there, and about 3,300 stock issues (common and preferred stock) are listed. Daily trading volume on the NYSE averaged 1.04 billion shares in 2000, and in early 2001 has been averaging over 1.3 billion shares. The NYSE accounts for about 85-90% of the trading that takes place on U.S. stock exchanges. The American Stock Exchange, or Amex, is also national in scope, but it focuses on list- ing smaller and younger firms than does the NYSE. It also has been a leader in the devel-     Table 3.1 Seat Prices on the NYSE   Year High Low Year High Low   1875 $ 6,800 $ 4,300 1990 $ 430,000 $ 250,000 1905 85,000 72,000 1995 1,050,000 785,000 1935 140,000 65,000 1996 1,450,000 1,225,000 1965 250,000 190,000 1997 1,750,000 1,175,000 1975 138,000 55,000 1998 2,000,000 1,225,000 1980 275,000 175,000 1999 2,650,000 2,000,000 1985 480,000 310,000   Source: New York Stock Exchange Fact Book, 1999.     2 Amex merged with Nasdaq in 1998 but still operates as an independent exchange. I. Introduction 3. How Securities Are