Evening star., 1938-02-23
BY SMITH REAVIS.
ASSOCIATED Press Stan Writer,

TO the old London STOCK Exchange,
housed modestly in its squat brown
stone home in Throgmorton street.
But just now Wall Street looks to
Throgmorton Street with considerable
curiosity and not little envy.
The British securities market doesn't
even bother to figure its total trans
actions daily, but some Wall Streeters
claim the total number Of shares
traded has greatly exceeded New York
Of late.
Contrasts between the two markets
are striking and to most Wall Streeters
not little perplexing.
Memebers Of the New York Stock
Exchange were pretty glum recently
when a membership sold for $4,000.
the lowest since 1918 (The last price
was $67,000.)
Seats Not Dear in London.
But III London stock exchange men,
berships have never commanded more
than few thousand dollars Recently
the total cost for an outsider to become
member was little more than $l3 900.
The New York exchange is studying
reduction in its 1875 memberships.
s. E. c. Chairman Douglas recently
suggested it was trying to feed too
many mouths.
But the old British exchange, with
4,l07 members, does not consider that
too many.
Perhaps the chief difference between
Wall Street and Throgmorton Street
in securities trading lies in the hurry
and hustle here, the leisurely pro-
cedure there.
Mechanically, the procedure of trad
ing in Wall Street is much more
elaborate and precise.
Buying and selling orders are poured
onto the floor of the exchange. Each
buying order is matched with selling
order, each transaction printed on a
stock ticker and reported over a net
work of wires throughout the country,
and each transaction settled with pay
ment and delivery of securities within
48 hours
The Brltishers don't print every
transaction on a ticker. An "oficial
list" Of transactions is kept, but not
very rigidly. 1t is not compulsory that
each transaction be marked down on
1t. There is quotation ticker system,
but it reports merely representative
prices from time to time to show which
way the market is going And trans
actions are settled up only twice a
month.
But there are more profound differ
ences. The public places its orders in
London with brokers who act strictly
as commission agents. They do not
trade for themselves. They, in turn.
buy from and sell to jobbers. who are
in sense wholesalers. The broker
with an order goes to jobber in the
security, and the jobber gives him two
prices, one at which he will buy. and
little higher price at which he will
sell, The difference represents the
jobber's spread" and from it he
makes his profit.
In sense. the jobber performs the
function of the specialist in New York,
who keeps book showing the orders
to buy and sell in his certain special
issues, and may trade for his own ac-
count to some extent to stabilize the
market. But New York maintains no
such rigid distinction as London does
with its brokers and jobbers.
Still another distinction is that Lon
don brokers split commissions with
banks and other financial institutions.
and may not maintain offices out of
town. The result is a large part of
their business comes through banks
with their branch ONCE system
throughout the country.
Split Commissions Barred.
New York Stock Exchange members
are not permitted to split commissions,
and the big American brokerage houses
maintain their own branch ofIice
systems
A further difference is the much
larger number Of issues traded in the
British market. The last New York
Stock Exchange bulletin showed only
1887 stocks and bonds listed. There
are more than 5000 issues on the Lon
don mart's official list, and there are
some $4,000 more in which transac-
tions may be made.
In this connection it should be ex-
planned that the London exchange rep
resents, in effect, a concentration of
business divided here between the stock
exchange, the curb exchange and the
over -the-counter market. In addition,
as financial center Of Europe, London
has a large number of foreign issues.
Many Of the issues are Of small COM
panies.
Wall Street has long considered its
trading technique superior to Lon
don's. The rigid listing requirements
of the stock exchange, the printing of
every transaction on the ticker, and
the settlement Of each transaction
within 4s hours, have been pointed to
as offering safeguards not available in
London.
The question of segregation of brok-
ers doing q commission business with
the public, from those buying and SELL
ing for their own account, along the
lines of the English broker -jobber seq
regation, has been studied by the
s. E. c., and pretty unanimously op-
posed by stock exchange members.
Insolvencies Cited As Evidence.
The bi-monthly settlement used in
London has been objected to here as
providing inadequate safeguards, and
records showing larger number of
ir1solvencies by London exchange mem-
bers than members here are offered as
evidence OF the superiority of the
American procedure.
Splitting commissions with outsiders
has been argued here, with stock ex-
change officials mostly opposing it, as
tending to take into partnership In
securities trading whole flock of per-
sons ready to 60 after business who
would be beyond the control of the ex-