Stock Exchange

Stock Exchange

Stock Exchange, a market in which members trade in securities, both on their own account and on behalf of others.

In Britain the London Stock Exchange, in Throginorton Street, is the main security market; there are also twenty-two provincial exchanges, mainly in the large industrial cities.

Although the history of stockbroking in Britain goes back to the seventeenth century and the formation of a large number of joint-stock companies engaged in foreign trade (such as the Hudson's Bay Company), most of the trading in stocks was carried out in coffeehouses in the City. The profession of stockbroking was first organized and acquired premises, called the Stock Exchange, in 1773; the present site was occupied in 1802.

Management of the Stock Exchange is in the hands of its Council, consisting of twenty-six members, which controls the election and conduct of members, rules, rates of commission and so on.

There are about 3,500 members, belonging to about 5oo firms, of which about two-thirds are brokers and the rest jobbers. Brokers act as agents for investors and buy from and sell to the jobbers. Every transaction in securities is known as a bargain, which, though noted in the s of both broker and jobber, is conducted and completed by word of mouth without written confirmation. (Hence the Stock Exchange motto 'My word is my bond'.) A broker who concludes a bargain may have the price 'marked' or recorded in the official list for the day, but is not under obligation to do so: the marking system is the only record of turnover.

Securities are not transferred on the floor of the exchange where the business is transacted; the staff of brokers and jobbers attend to the transfer. -

Dealings in gilt-edged securities are for cash, all other deals are settled on the fortnightly Account days fixed by the Council. There are twenty-four Accounts in a year (of which four run for three weeks). The advantage of the Account is that it provides time for changes in the value of securities before payment is required.

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