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 XI. The security collateral loan market

Collection:: Economics Books

SECURITY COLLATERAL LOAN MARKET 293 balk at securities of excellent intrinsic value, which cannot readily be sold on the Stock Exchange and will often decline absolutely to lend on them if they are not listed there. He is also wary of stocks with very high prices, or others subject to heavy price fluctuations. He dislikes “odd lots” of from I to 09 shares of stock, since these may involve a more compli- cated process in marketing than “round lots” of 100 shares or multiples of 100 shares. As security markets became more organized and continu- ous, the securities dealt in upon them became more and more available for loan collateral, apart entirely from their intrinsic value. This fact not only explains the popularity of collateral which is listed on the New York Stock Exchange, but also the increasing acceptance as collateral of issues listed on other definitely organized and increasingly dependable stock ex- changes in this country. Protection of Lenders.—In the example of the $100,000 loan envelope given in Figure 22, it will be noticed that the loan is secured by an excess of collateral amounting to about 25%. The amount of this security margin over the face of the loan demanded by lenders, varies somewhat from time to lime according to conditions in the money market and the stock market, and also according to the quality of collateral, the particular policies of individual lenders and numerous other factors. Often, however, Stock Exchange firms take pride in ronsiderably exceeding the minimum security margin require- ments of the lender, and when collateral values shrink through declining security prices, usually provide additional securities to margin their loans before the lenders even request it. As the large lenders all have stock tickers in their loan departments, however, they are always in a position to require more margin the instant they consider it necessary. Also, under their agree- ments with the borrower, they can “throw out” of the en- velopes any collateral they do not like, and require the borrower ‘0 make “substitutions” by providing more acceptable securi-

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