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

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Document type:: Monograph

Structure type:: Chapter

Title:: Chapter IX. The odd-lot business

Collection:: Economics Books

232 THE WORK OF THE STOCK EXCHANGE order to carry on its work efficiently and successfully. One instance of this fact has been the fixing of 100 shares of stock as the unit for ordinary trading on its floor. Difficulties with Smaller Trading Unit.—Many practical -onsiderations have combined to establish this 100-share unit as a necessity today. The number of odd-lot transactions occurring upon the Exchange each day is usually as great or greater than the number of round lot transactions. The flood of separate transactions which would result from the adoption of a smaller unit of trading would make it both impracticable and unprofitable for the commission broker or the specialist to give that conscientious attention to each individual order which is now a vital factor in establishing prices fairest to both buyers and sellers. A smaller trading unit would furthermore exag- gerate the difficulty of making large purchases or sales of stock almost past the possibility of satisfactory performance. A broker, for example, with an order to purchase 10,000 shares— a delicate and laborious task even with the present 100-share unit—would find it practically impossible to execute it quickly and efficiently were he forced to accumulate it by 10-share or even 25-share purchases. Other obstacles would also arise from trading in such a small unit. The banker loaning funds on security collateral would be forced to receive huge bundles of certificates which would be hard to safeguard and inspect. Moreover, the full burden of the greatly increased number of separate transactions in less than 100 shares would at once descend upon the indis- pensable stock ticker and largely destroy its usefulness; the tape would be clogged and delayed with the records of thou- sands of small and relatively unimportant transactions.> So often would its quotations be based on a negligible number of shares that a recorded price would lose the significance pos- sessed by present prices, which represent transactions in I00 shares. This would be particularly true of closing bid and TL See Appendix VIIIf.

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