The work of the Stock Exchange

Bibliographic data

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.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter VII. Credit transactions in securities

Collection:: Economics Books

188 THE WORK OF THE STOCK EXCHANGE customers are regularly financed. Some mornings as early as 0:45 A.M., the “loan crowd” assembles on the floor, and within it the loaning and borrowing of stocks may go on inter- mittently till 1:30 P.M. ; no loans are made between 1:30 P.M. and 3:00 p.M.; most if not all of the day’s loans are made between 3:00 P.M. and 3:30 P.M. This loan crowd is composed of Exchange members who wish to borrow or loan stocks. White & Co.’s Board member —i.e., the particular partner in the firm who is a member of the Exchange and who handles its business on the floor—there- fore seeks out Green, a broker with 100 shares of Corn Prod- acts to lend. To obtain the loan of Green’s stock, White & Co. usually have to agree to lend Green a sum of money equal to its market value. If, for example, Corn Products closed that day at 100, Green will obtain a loan of $10,000 in return for the loan of the stock which he makes to White & Co. It is understood between such lenders and borrowers of stock that the amount of this money loan must be kept at a figure equiva- lent to the market value of the stock in question. Should Corn Products rise from 100 to 105, White & Co. would have on his demand to loan to Green an additional $500 upon it; while if the stock should decline from 100 to 95, Green would have on their demand to return to White & Co. $500 of the original loan of $10,000. Thus Green borrows White & Co.’s money and White & Co. borrow Green’s stock. But the money still belongs to White & Co., and the stock to Green. For this reason, Green must normally pay interest on the money borrowed from White & Co. On the other hand, White & Co. must pay to Green such dividends as may be declared upon the stock borrowed from him.” Of course, Thompson, as a principal, must in turn repay these dividends to his agents, White & Co. This necessity of the short seller to pay for dividends in this way, which often puzzles inexperienced traders and in- 7 See Chapter XV. p., 427.

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