New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1920-03-23
Favor Change in
Settlements on
Stock Exchange
Committee of Bankers and
Brokers Advocates Euro
pean Plan, but Says
Time Is Not Yet Ripe

Tho principle of the term settle
ment, which would provide for the
weekly, fortnightly or monthly de-
livery Of stocks traded in on the New
York Stock Exchange, instead Of by
$3.50 the next day, as at present, is heart
ily Endorsed by joint committee OF
bankers and brokers, recently ap-
pointed by tho American Acceptance
Council However, like the authorities
Of the Stock Exchange, the committee
does not feel that the innovation
could be successfully introduced i'm
mediately
Paul ii. warburg, formerly vice
governor of the Federal Reserve
board. is chairman of the committee,
which was selected on Mr. Warburg' s
motion for the purpose of studying
the sdvisability of creating ways ana
means Of modifying the present system
of settlements on the New York Stock
Exchange and substituting therefor
some system of periodical settlement"
Other members of the committee are
Walter +. Frew. John h. Fulton,
Donald G.. Geddes, Gates w. McGar-
rah, W II. Porter, William II. Remick,
John f. Rovensky, Edward Shearson,
Samuel F. STREET., and Z. V. II. Thaycr.
What Committee Finds
After several months elaboration,
the committee yesterday made public
its preliminary report, which shows:
/. That the adoption of the term
settlement on the New York Stock
Exchange would result in the elimina-
ton OF vast amount of duplication
in the handling of securities and in
the efecting Of payments.
2. That, with proper safeguards, a
term settlement system would be con-
ducive not only in bringing about a
desirable simpliticatlon III settlement
operations but also in providing a
safer basis for coping with the money
requirements than is possible in The
present call money market.
3. That mass of technical ques-
tons would have TO be solved and
some legal points to be disposed of
before final conclusion could be
reached
+. That it would not do simply to
copy the European systems, but that
they would have to be modified and
strengthened In order to serve our
peculiar needs. To illustrate; a plan
for term settlement with us would
have to provide for at least as strong
q protection by margins, constantly
to be kept up, as offered by the sys-
TEN now in vogue.
Time Not Ripe
"And," according TO the Acceptance
Council bulletin, finally that the new
daily settlement machinery provided
BY the New York Stock Clearing Cor
poration is TO be welcomed as a very
marked step in the right direction
When this highly complex and SPLEEN
did.y conceived apparatus has tunc-
toned for certain time and has been
tested and perfected in the light of
actual experience safe basis VIII then
De furnished for the contemplation OF
the ultimate step, the adoption of a
term settlement system.
while the American Acceptance
Council Is strongly in favor Of de-
ge.opment in this direction; while it
pefcelves in the adoption Of the term
settlement system one of the indls-
1ensab.e steps toward the perfection
81 our banking system, it cannot be
emphasized too strongly that precipi-
tate action at this time would be moth
ing short of disastrous. The problem
must be fully understood and ire plans
nus be carefully matured before the
ina! plunge may be safely ventured.'