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.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter XI. The security collateral loan market

Collection:: Economics Books

SECURITY COLLATERAL LOAN MARKET 279 on the minimum requirements of the security market. This arrangement continued until 1919, Out of this period of war regulation, however, came two permanent improvements in the security loan market. Pre- viously, call money had been bid for like shares at a certain post on the Stock Exchange floor.® But more effectually to regulate and stabilize the market, the money desk system, presently to be described, was installed.” Also, the Federal Reserve Bank of New York began in 1917 to compile statistics as to the funds loaned on security collateral by its member banks, and in 1918 the New York Stock Exchange began a similar compilation of the borrowings on securities made by its members. The Reserve Bank has continued its compilation ever since, while the Exchange discontinued its figures at the end of 1922, but began them again at the beginning of 1926 on a monthly basis. On the latter occasion, the Reserve system and the Exchange simultaneously adopted the policy of pub- lishing these figures regularly.® In this way an increasing knowledge of the security loan market and a reasonably precise measure of its outstanding amounts, is regularly made avail- able to everyone. The Time Loan.—There are two distinct types of loans made upon security collateral—time and call loans. The time loan, as its name implies, is made for a definite period of time —three, six, nine, or sometimes twelve months—at a fixed rate of interest which does not change during the life of the loan. To secure the loans there are deposited as collateral with the lender, securities whose value exceeds the amount of the loan by a minimum of 20% to 30%. The lender is also protected by the agreement (Figure 20) that if the market price of the security collateral declines, the borrower must put up addi- tional securities as collateral. For if during a falling market ® For details of the prewar methods of lending money on the Stock Exchange floor, see testimony of J. H. Griesel, Money Trust Investigation, Vol. I, p. 742 et seq., and also Appendix Xid. 7 Jee testimony of Governor Strong, “Stabilization” hearings, p. 353 ef seq. 81bid., p. 360 et seq.; also testimony of Governor Roy Young in La Follette Resolution hearings, p. 68.

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