Economics becomes a science · 1770s–1920s
1792
The Buttonwood Agreement
24 brokers on Wall Street agree to trade with each other at a fixed commission.
On 17 May 1792, 24 brokers signed an agreement under a buttonwood tree on Wall Street to trade only with each other and charge a commission of 0.25%. Their group grew into the New York Stock Exchange.
💡 Why it made sense then
Brokers wanted a trusted circle to trade with and to stop competing on fees.
Ideas it gave us
- 📈 Broker
A broker is a licensed firm that places trades on an exchange for you and holds your investments in an account, like Fidelity, Schwab or Robinhood.
- 📈 Commission
A commission is a fee a broker charges for placing a trade. Most US brokers have charged $0 commission on stock trades since 2019.
- 📈 Stock exchange
A stock exchange is a regulated marketplace where buyers and sellers trade shares, such as the New York Stock Exchange (NYSE) or Nasdaq.
Practise with $10,000 in play money
Free. No real money involved.