New-York tribune., 1912-02-08
WANF ARBTRAGING BACK
MANY Sign Petition to Governors
.of the Stock Exchange.
ONLY ONE OBSTACLE IN PATH
Restoration Said To Be Favored
if Splitting of Commissions
Can Be Avoided.

petition is being circulated on tho New
York Stock Exchange requesting tho gov
ernnE committee 10 reconsider its ruling
regarding arbitrage transactions adopted
81 April This ruling. which practically
put stop 90 the arbtrage business on the
exchange. went into effect July {, and has
resulted in p considerable loss Of business
10 tho brokers who have been active in
that sort Of trading II prohibited any
business domestic or foreign. between a
member Of the exchange and nou-mem-
ber unless the full commission of one
eighth Of I per cent was charged. and As
trading was not profitable under this re-
slriction arbitragiug came 10 an end.
The petition has already been signed by
over half the active members Of the eX-
change, and IL Is expected that it will he
presented 10 the governing committee at
In" regular meeting Wednesday. II is
said that several Of the governors arc in
favor Of removing tho prohibition on arbi-
TRACE trading providing tho business can
b. carried on under som" plan that will
prevent splitting commissions. which was
ia" chief objection the Stock Exchange
authorities had against this method Of
trading.
The business of arhitraSing, which was
chiefly done between this city and London,
was conducted under a ''ioint account
(Which means for their mutual beneft or
riskD between New ork Stock Exchange
firm and Ii London Stock Exchange house"
aud was based upon the differences Of
prices usually ruling in given stock in
The two markets AZ the same time.
Under the Joint account system Of
1. tr.- . hot
he was acting for himself as we'll as for
the London broker, charged no commission,
and was thus able 20 make "a profit, even
when the price diTcronC" between stocks
lere and in London wa- as small as ono
eighth Of per cent Tho Stock Exchange
authorities looked upon this Joint account
trading IS nothing more than splitting
of commissions which is strictly prohibited
b. the rules Of the exchange. and for that
reason they put stop 10 II.
How the aroitrsge business can ne con-
Quoted uronrsblv wjthou; this virtual split
ting of commissions through 'joint a"-
count" trading is something that tho
traders are nov trying 70 work out If
they are successful they think there will
be no doubt Of "a" governors Of the oN-
change couseutinE 10 a resumption OF the
business.
Aftcr the ruling requiring that thc fun
commission must bo charged on ali bust
ness transacted between a member and
non member 81 tn" cXchaug" went into
force Stock Exchange houses that had
partners in foreign banking houses were
stilI able 10 conduct arbitrase transactions
on the Joint account system with the"
partners. who being members Of th" local
firm. did not have To pay commission.
Complaint was made that this was unfair
10 the members who had no partnership
relations with foreign houses, and "a a re-
suit the Stock Exchangc authorities carly
I'm January adopted resolution requiring
that tho full broksraS" commission must
be paid. even between firms having the
same OF some Of tho same partners. This
was the final blow against arhitrag" trading
on the exchange and since then th" hUsi-
nets has Dean at stand tin.