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 VIII. The floor trader and the specialist

Collection:: Economics Books

THE FLOOR TRADER AND THE SPECIALIST 227 70 to 65 is here the source of the inevitably violent price fluc- tuation. We will also presuppose that a severe decline has taken place in this stock the day before and that overnight the divi- dend has been reduced 1%. At the close the day before, 70 was bid for 200 shares, and 100 were offered at 73. At 9:55 the next morning the specialist finds that in addi- tion to the orders in his book, as shown in Figure 15, he has five 100-share lots to sell at the market. And now comes the crucial question—at what price will the market open? No matter what price between 69 and 65 this stock sells at, the specialist’s shares to sell at the market will be increased by the many stop orders to sell. Under such circumstances stock to be sold is bound greatly to overbalance stock to be bought, and hence a severe decline is unavoidable. In this instance the specialist happens to have the market all to himself, and opens the stock “1,600 shares sold at 64.” By so doing all selling and buying orders, except the 100 to sell at 73, are executed at this single price. The disadvantage of this method of opening the stock is, of course, that the 500 shares to sell at the market are sold at a very low price. But it must be remembered that the specialist as an agent and broker stands in the same rela- tionship to his buying customers as to his selling customers. [n the light of the obvious conditions of supply and demand in this stock, prices are bound to decline. What is fair to pay for the seller’s stock when the specialist knows these conditions? Why should he pay more for that stock than the price at which all the orders can be crossed? So it is undoubtedly better that the stock should open 1,600 shares at 64. Since this is the first and only sale, customers could not declare that they had heen discriminated against and would probably be inclined to take such an occurrence as the fortunes of war. Advantage of This System of Opening.—The advantage and fairness of opening the stock in this way becomes more apparent when some other way is attempted. Let us suppose that in the above instance the specialist proceeded as follows:

Access restriction

Copyright

fullscreen: The work of the Stock Exchange

Monograph

Chapter

Table of contents

Download

Monograph

Chapter

This page

Image fragment

Citation links

Citation recommendation