How did “negotiable” mean “a good or security whose ownership is easily transferable”?
A document of an amount of money, or a title, which is readily transferable to another.
Negotiability also gives a right to the possessor of the property to transfer it to anyone but for consideration. The Negotiator is not required to establish his credentials. In negotiability, the property is accepted in good faith.
Where did this legal meaning hail from? Etymonline doesn't discuss it.
The etymological notion underlying negotiate is of ‘not being at leisure’, and hence of ‘being busy’. The word comes ultimately from Latin negōtium ‘business’, which was a compound formed from the negative particle neg and ōtium ‘leisure’ (source of English otiose ). From it was derived the verb negōtiārī ‘do business’, which passed into English as negotiate. There is some early evidence in the derivatives negotiation and negotiator that the original Latin sense of the word survived into English, but in the verb itself it had already developed via ‘transact business’ and ‘hold business discussions’ to ‘hold discussions’ generally.
Word Origins (2005 2e) by John Ayto. p 347 Right column.