New-York tribune., 1912-01-04
DAY OF ARB|TRAGE ENDS
Stock Exchange Adopts Amend
ment to Constitution.
USE NEW METHOD OF VOTING
Two Other Changes Accepted,
Including One Covering Part
nership in Foreign Firm.

| The arbitrage business on the New York
Stock Exchange. which has been leading n
pre0rious existence since the adoption by
the governing committee last April of a
resolution prohibiting any business, domes-
| tic or foreign, for the joint account Of a
member OF the exchange and a non-mem-
ber, where each party TO the transaction
charged a commission or allowance re-
| ceived its knockout blow yesterday, when
an amendment TO the constitution of the
exchange was adopted providing that here
after the full brokerage commission must
be paid where stocks are dealt in between
firms having the same or some Of the same
| partners. In other words. Stock Ex-
change house whose partners also are
members of foreign banking house can
not split commissions with that house in
any transactions involving the purchase Of
securities on tho Stock Exchange.
Up 10 the present. firms having such for
! eign connections have been able to carry
on arbitraging by charging their foreign
house only the 81 rate which obtains be-
tween members, instead OF the full sl2 20
| rate which non-members have to pay
broker on every purchase or sale OF one
! hundred shares OF stock. This. 1t has been
urged, has been unfair 10 the members who
| had no partnership relation with foreign
| houses and who have been prohibited from
doing business on what was known as
"joint account" with London Stock Ex-
change houses under the resolution already
referred 10. Naturally they objected to this
state OF affairs, and the governing com
/ mittee recently suggested an amendment
| 10 the constitution preventing II. This
amendment and also two others relating To
partnerships, have now been adopted by
vote OF the members.
Under a recent ruling OF the Stock tX-
| change authorities all amendments TO the
constitution must be voted upon by secret
ballot. instead OF. as formerly, by each
member having his vote recorded by the
| chairman on the floor of the exchange.
| Under the old rule members who were not
on the floor were not able 10 vote. and
this barred out many members OF the eX-
change who reside f. other cities and sell
| dom or never visit tho exchange. Now,
| copy or the proposed amendment or
amendments IS sent TO every member OF
the exchange with a coupon attached on
which TO record his vote. which is to be
| attached and sent TO the exchange authori-
| ties. The members have a week In which TO
send I'm their votes. which are counted by
tcllers appointed for tho purpose by the
governing committee. who then make the
result known 10 the members. 1t takes a
majority vote OF H., members OF the ex-
change 10 Kill an amendment proposed by
tho governing committee, but majority
vote is not necessary TO pass new amend
ments.
- In Nafaa fnll gn
for the first time I'm voting on the amend
ments Just adopted The voting began a
week ago and ended yesterday, and the
result was said TO be overwhelmingly in
favor OF the changes proposed by the gov
erning committee Brokers expressed them
selves as greatly pleased with the new vot-
ing plan.
The amendment. which puts a stop to
arbitrage dealing between houses having
partners in foreign banking houses. Is 10
Section 3, Article 81 of the constitution
which read follows:
| A firm having as a general partner
| member of the exchange shall be entitled
| 10 hnye its business transacted at the rates
| OF commission hcreinbefore prescribed iOr
members. a member OF the ekcnahse cam
not confer this privilege upon more Una"
one firm at any time.
To this has been added
J The privileges provided for under this
! section can only be conferred upon Dranch
| house I'm this country when established uh,
der the same name as the parent firm and
| ir which partners and their respective In
| terests are Identical with those OF the par
ent firm.
or the other two amendments adopted
Yesterday. one provides that the law pro-
! hibiting a person from being eligible TO
either general or special partnership In
more than one registered firm at the same
/ time shall not obtain when member OF
such firm forms a partnership In for
elgn country under the same or different
name from that OF his firm in this country
provided that the firm in said foreign couh-
trv shall not derive any benefit from the
privileges which attach to members of firms
registered at the Stock Exchange. The
second makes secuon Of Article 30 OF the
| constitution read:
| Whenever Il shall appear 10 the govern
ing committee that a member mas FORMED
| rartnershIp or established branch once
! ior Ca indivdually or through any member
| Of his firm interested in a partnership IN q
| foreign countryl, whereby the interest or
! good repute OF the exchange may suiieI,
/ the committee may require IIe ioit ~
/ ftbe interest i'm said foreign partnership or
ssunb hTanch Office. as the case may be.
| The words I'm brackets are new.