Definition of ABC agreement

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TeachMeFinance.com - explain ABC agreement



ABC agreement -- an ABC agreement is an agreement between an employee of a brokerage firm and one of its employees. The agreement details the firm's rights when it purchases a New York Stock Exchange membership for the employee. Since only individuals can be members of the New York Stock Exchange, it is common for firms to finance the employee's membership or seat. The ABC agreement will likely say that the employee may keep the membership and buy another seat for an individual who represents the firm, that the employee can sell the seat and give the money from the sale to the firm, and that the employee can transfer the seat to another representative at the firm.


another definition...

ABC agreement -- Contract setting out the rights of a broker agency when it acquires a membership in the New York Stock Exchange (NYSE) for one of its staff. In light of the fact that only individuals can associate with the NYSE, it is usual procedure for a company to fund the purchase of a membership, or seat, by an employee. The ABC Agreement sanctioned by the NYSE contains certain clauses that govern the way in which the seat is to be used in the future. Firstly, while keeping the seat, the member may purchase a new seat for an individual nominated by the firm. Secondly, the proceeds of the sale of a seat may be turned over to the firm. Lastly, another employee may become the owner of the seat under an act of transfer on the part of the original owner.




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Mark McCracken

Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English".


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