- A person or entity that does not have trading privileges or an exchange membership but who trades through a current member. Non-member traders do not have the same rights as member traders, which include the ability to execute trades on an exchange and authorization to have contracts under their name.
Each exchange has its own specific set of requirements potential members must meet. For example, the New York Stock Exchange (NYSE) is considered to have very strict requirements, and only allows a limited number of members to buy seats and earn the right to trade. Non-member traders might gain access through current members for speculation purposes or to hedge through derivatives to reduce risk. Some non-member traders could be subject to certain margin requirements when placing trades.
Brokerage firms that allow non-member traders and investors to execute trades at exchanges might also solicit and accept orders to buy or sell futures contracts, options on futures or retail off-exchange forex contracts.
Investment dictionary. Academic. 2012.
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