460 THE WORK OF THE STOCK EXCHANGE
Bucketshops.—A “bucketshop” is a fictitious stock broker-
age office which either pretends to execute its customers’ orders
without actually doing so, or to carry such customers’ long
commitments when actually it secretly sells them out at once
after purchase. If the customer is mistaken in his opinion of
the stock which he orders to be purchased, and it declines in-
stead of rises, the bucketshop by pretending to sell it out at
lower prices can appropriate the customer’s margin. In effect,
therefore, the bucketshop makes it a practice to take a position
in the market opposite to that of its customers; the French
aptly term such firms maisons de contre-partie. “Bucketing”
is of course a complete perversion of legitimate stock broker-
age, and in its economic effects constitutes mere gambling and
wagering on prices, rather than actual speculation.
This practice has always been strictly forbidden to Stock
Exchange members, who ‘are also prohibited from having any
connections or business transactions with non-member firms
engaging in such practices. The Constitution states 20
No member shall be directly or indirectly interested in or asso-
ciated in business with, or have his office directly or indirectly con-
nected by public or private wire or other method or contrivance with,
or transact any business directly or indirectly with or for
(1) Any bucket-shop; or
(2) Any organization, firm or individual making a practice of
dealing on differences in market quotations; or
(3) Any organization, firm or individual engaged in pur-
chasing or selling securities for customers and making
a practice of taking the side of the market opposite to
the side taken by customers.
Many years ago, the.Stock Exchange found that non-mem-
ber firms who were “bucketshops” largely depended, to main-
tain the fiction of being legitimate stockbrokers, upon the use
of Stock Exchange tickers. By restricting the employment
of these tickers through the Committee on Quotations and
Commissions, the Stock Exchange has in consequence been
~ ® Constitution (Rules, Chapter XII, Sec. 11).
