The work of the Stock Exchange

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Monograph

Identifikator:: 1831284952

URN:: urn:nbn:de:zbw-retromon-225876

Document type:: Monograph

Author:: Meeker, James Edward http://d-nb.info/gnd/126597340

Title:: The work of the Stock Exchange

Edition:: Revised edition

Place of publication:: New York

Publisher:: The Ronald Press Company

Year of publication:: [1930]

Scope:: XVI, 720 Seiten; Illustrationen, Diagramme

Digitisation:: 2022

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter VII. Credit transactions in securities

Collection:: Economics Books

CREDIT TRANSACTIONS IN SECURITIES 187 to pay such dividends as may be declared upon stock of which he is short and which he has to borrow. The Purchaser’s Attitude.—With these preliminaries ar- ranged, White & Co. proceed to sell for Thompson 100 shares of Corn Products on the floor of the Stock Exchange to Brown, another broker, at 100. Brown, the buyer, does not know or care whether White's customer is selling outright or on credit. He has made an agreement on the floor of the Exchange to pay $10,000 for 100 shares of Corn Products. Unless he pays for the stock by the next day, he may be subject to the severe penalties imposed by the Stock Exchange when a broker fails to meet his obligations. Furthermore, he knows that White & Co. are under the same compulsion to deliver to him the 100 shares of Corn Products by the same time. Where White & Co. will get this stock is no concern of his. Meanwhile White & Co. have assumed the responsibility of delivering by 2:15 p.M. of the next day, stock which they do not possess. It may happen that Corn Products declines to 95 that same day, thus permitting Thompson to buy 100 shares at this price and make a profit of 5 points—or $500—minus commissions, etc. If this is done, White & Co. can deliver to Brown by the next day, the stock thus purchased and so obviate any further difficulty in the transaction. Yet in a majority of cases, stock which has been sold short will not decline quite so conveniently. Probably, then, Thompson will wish to remain short of the stock for some time. Function of the “Loan Crowd.”—To avoid just this dilemma which brokerage houses would otherwise experience in making deliveries of stock which had been sold short by their customers, a system of borrowing and loaning stocks has developed on the floor of the Stock Exchange, which is a counterpart of the system also developed there for borrowing the “call money” with which the margin purchases of brokers’ “See Chapter XII. p. 312.

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