May Day: May 1st, 1975 – The End of Fixed Stock Commissions

May 1st, 1975 is a very important date in the history of the investing. Up until then, stock brokers charged a fixed commission on all transactions. For example, a 100 share lot might cost $35, a 1000 share lot would cost $350 and a 10,000 share lot would cost $3,500. There was no discounting for larger orders (even though the actual execution costs did enjoy economies of scale), and no negotiating.

The SEC (Securities Exchange Commission) ended that on May 1st, 1975 with the abolition of the fixed schedule, which had been in place since the signing of the Buttonwood Agreement in 1792. Within three weeks, commissions had dropped in half.

Perhaps even more interesting, was the story of one of the pioneers of the discount brokerage industry that arose from the ashes of the Buttonwood agreement: Muriel Siebert. She was the very first woman to hold a seat on the New York Stock Exchange when she purchased her membership in 1967. At the time, there were 1,365 other members – all men. If that wasn’t enough, she founded her own brokerage in 1969 and turned it into the first national discount brokerage on May Day.

Preet Banerjee
Preet Banerjee an independent consultant to the financial services industry and a personal finance commentator. You can learn more about Preet at his personal website and you can click here to follow him on Twitter.
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  • Michael James

    This was indeed a very improtant day. Some time ago when I was looking through my father’s old papers, I was amazied to see how much he paid in commissions for stock trades. It’s incredible that he had to pay hunderds of dollars for what I pay $9.95 for today.

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