Evening star., 1934-03-20
WSEDEXCHANGE
BILL IS DISCUSSED.
Strong Efforts for Passage
as It Now Stands Are
Expected.
BY EDWARD c. STONE.

DULL DIOhbIS dIIu DdIlheIS III lLl6
financial district today were studying
the redrafted Fletcher Rayburn
measure to control all stock exchanges.
Since the revised bill has the ap-
proval of Secretary Morgenthau and
other Treasury officials and of Gov
Eugene R. Black of the Federal Re-
serve Board. it is believed in financial
circles here that strong efforts will be
made to get the bill passed about as
1t now stands.
The most important modification in
the bill deals with margins 1t is now
Hntended to require an initial margin
of 40 per cent of the market value
of a security or 100 per cent of the
lowest price at which it has sold in
the past three years. At the same
time the Federal Reserve Board is
given authority to alter the margin
requirements, adding fleXibility. The
bill also provides separate limitations
on the maintenance of margins as
distinct from the initial extension of
credit.
In no event would the credit be
more than rs per cent of the current
market price. This provision takes
the place of the alternative of 80 per
cent of the lowest market price within
three years contained in the original
bill.
Other Important RevisiOns.
Principal revisions effected in the
new bill, aside from the margin re-
quirements. are:
l. Relaxation on brokers and deal
ers to provide that members may be
odd-lot dealers and that brokers who
are also dealers may be members OF
exchanges, with certain restrictions.
Specialists. instead of being confined
to brokerage activities, are required to
be either brokers or dealers, exclusive
ly. They are no longer forbidden to
execute market orders. but are barred
from effeCting discretionary orders.
2. The liability provisions have been
completely relaxed by placing the bur-
den Of proof of damage on the person
seeking redress and conining the
damages to actual losses
3. Sections which would hamper the
distribution by financial agencies and
newspapers of facts and statistics
concerning stocks are modified to re-
move any such burdens
The bill adhereS to the general
policy of strict Government regula-
ton, although many of the most
drastic provisions have disappeared
Brokers said here today that the bill
still leaves to the Federal Trade Com
mission control over the conduct of
industry through registration require
ments relating to corporate issues list
ed on licensed exchanges.
Little Said About Banks.
The Federal Reserve Board would
have the power to prevent excessive
credit being used for the purchase of
securities. Banks are now excluded
from the definitions of broker" and
dealer"
In order to prevent any general
liquidation on account of new margin
rules. provisions regarding loans now
outstanding would not go into effect
until January 81. 1899.
The new measure increases the
powers of the Federal Reserve Board
and decreases the grip Of the Federal
Trade Commission. A great many
other less important changes have
been included in the revamped bill.
Financiers in Washington predict
some further changes during the hear
ings, but believe the major part of
the changes have now been made.
Any new developments at the hear
ings will be awaited with intense in
terest. Meanwhile. the bill is sharing
the lineight with strike news as the
leading market factors