What is a ‘Member Firm’
A member firm is a brokerage firm that holds at least one membership on a major U.S. stock exchange and is a member of a self-regulatory organization.
BREAKING DOWN ‘Member Firm’
Member firms enjoy the rights and privileges of exchange membership, such as voting on exchange policy, along with the obligations of membership, such as adherence to the exchange’s fair standards of trading, its member solvency requirements and the settlement of disputes with customers through exchange arbitration proceedings.
Example: NYSE Member Firm
The New York Stock Exchange (NYSE) is publicly traded corporation with 1366 individual members who own seats (memberships). Only individuals may own a seat on the Exchange. When one or more of the individuals owning a seat is associated with a firm, the entity is called a member firm. Since more than one individual may be associated with the same member firm organization, the number of member firms is much less than the number of individual members.