The sun. [volume] (New York [N.Y.]) 1833-1916, 1875-12-26
A Word to the stock Exchange.

Not only Spectators and merchants, but
every man in the United States who owns
negotiable securities, is interested in the
transactions of the New York Stock tx
change. Tho inquiry becomes pertinent
therefore, whether IT is practicable to con-
trive some better guarantees of capacity
and probity than are afforded by the Board
Of Brokers as at present constituted and
conducted 1t will be sufficient 70 cite two
cases Of not infrequent occurrence, to show
that the relation Of customer aud broker
calls for serious attention.
First-Sales of stock are often rendered
nugatory by the buyers refusal 10 take the
shares on presentation. such refusal is OF
course equivalent TO failure on the part OF
the purchasing broker, but by the custom
of the Exchange the possible loss occasion
cd by "A subsequent depreciation of the
securities must be borne by the owner of
the stock. Now, ought the broker who
made the sale TO be held responsible for
the shrinkage, or, in the event OF his de-
fault, the board Of which he is IA member?
Secondly-For downright embezzlcment
on the part of n broker of the proceeds
Of stock Sold the customer has his rem
edy ut law; but of what avail is that rem
edy against fraudulent and probably alb
sconding debtor? should the association
of the stock Exchange assume the debt,
and would II be wise 10 provide by gen
eral cautionary fund against such emer-
gencies2
These questions are suggested for the
consideration OF brokers ana OF their Gus
TONERS throughout the country. They are
propounded in the interest Of both par
ties, aud some wholesome practical results
may be expected from temperate dis
cussiOn OF them. Meanwhile, we would
point out that they have all been answer
ed, and answered atirmatively, in France.
The Paris Board, or Parquet is composed
Of sixty brokers, designated by the execu-
tive head Of the nation on the joint recon-
mendation of the Minister of Finance and
the Governing Committee Of the FIX change.
A seat in the board, the place Of agent dc
change, has been worth Of late years from
three TO four hundred thousand dollars,
and its purchase must he ratified by the
| Governing Committee, while the candidate
accepted by them is subsequently submit
| ted 10 the vote Of the whsle body. After
| paying for his seat, the member elect il re-
! qurcd TO deposit in the national treasury
the sum OF Twenty-Five thousand dollars us
"A guaranty Of upright conduct on the
Bourse, and further sum Of twenty
thousand dollars with the Syndicate OF the
| Exchange 10 serve as cautionary fund
applicable to all losses sustained by his
customers through the brokers' default, or
through the avoidance OF contracts to
which he had committed them.
Every broker, then, must furnish secu-
rity for the proper discharge Of his func-
tons to the amount of forty-hve thousand
dollars, not represented by the signatures
Of bOndsmen, but actually deposited in
cash. The normal value of his seat. which
cannot De sold without the assent of the
| Governing Committee, may be considered
an additional guaranty. But there are
further provisions to insure the customer
against loss. Beside the deposits men
toned, and the individual liability of
members, the Syndicate maintains gene
raj cautiouary fund, which IL derived from
the sale OF stamps. by the rules of the
board every transaction on Change must
be certified To the Governing Committee,
which refuses to recognize its validity ul-
less n certain stamp has been affixed to the
papers that embody it. How considerable
a revenue il yielded by this tax, may be
inferred FROM the fact that for every
transaction involving twenty-five shares,
a stamp of twenty-five cents is requisite
The large fund acciuing from this source
is applied by the Syndicate, first, to the
reimbursement of customers whose losses
through n brokers' failure exceed the
amount Of his cautionary deposits ana in
dvidual assets; secondly, to certain minor
purposes specified in the bylaws OF the
Bourse; and the residue is equally divided
among the sixty members OF the board.
AS IA matter OF fact, the bankruptcy OF
an agent dc change has become n thing OF
rare occurrence in Paris; but in no event
can his customers be involved In his dis
aster. The broker is directly responsible,
to his principal for the efficient and faith
full performance OF his trust and the whole
board Is responsible for the broker. II, fol
example, client has directed the sale o.
certain securities to-day, and the purchaser
10 unable 70 take them, owing to subse