A firm that does not have any employees who are allowed to trade on the floor of an exchange. To become a member, one needs to purchase a membership or a seat on the exchange, which can be very expensive. Furthermore, there are usually a set number of memberships to an exchange; for example, on the New York Stock Exchange, there are 1,366 seats. As a result, nonmember firms must work with and through member firms in order to gain access to the floor and execute trades.
A firm that is not a member of an organized securities exchange. Nonmember firms must work through member firms to have their orders executed on the exchange floor.