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ABC agreement

An ABC agreement is an agreement between a brokerage firm and one of the firm's employees that outlines the firm's rights after purchasing a seat on the New York Stock Exchange.

Expanded Definition

In order to trade on the NYSE, brokers need a "seat." Usually, the broker's employer will buy the seat for the broker and the ABC agreement details what happens to the seat if the broker no longer works for the firm. When the broker is no long associated with the brokerage that paid for the membership seat, he or she can basically (A) Keep the seat and buy an additional one for the firm to assign, (B) Sell the seat and turn the proceeds over to the firm, or (C) Give the seat to another employee at the firm.

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