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

204 THE WORK OF THE STOCK EXCHANGE ties. With call loans they can instantly retire the whole loan at will, and with time loans this can be done if the borrower does not in every way satisfy their collateral requirements. In addition to these extensive powers of self-protection, there is often a second and more or less concealed margin provided on security loans, arising from the fact that the lender can “mark” any collateral security at any price he wishes. If, for example, he considers Steel too high at 160, he may refuse :0 lend on it above a marked value of 140. This practice is mostly employed after considerable price advances in the mar- ket. This was very conspicuously the case in the summer of 1929 before the panic. During the crisis, however, lenders relaxed margin requirements on loans from about 50% to about 25%, which afforded valuable relief to the rapidly de- clining stock market, and proved the desirability of maintain- ing flexible margin requirements. Lenders usually are willing to accommodate borrowers by allowing the latter to get certificates wanted for delivery out of their loan envelopes, provided that they “substitute” other securities equally acceptable. While this practice considerably complicates the work of security lenders’ offices, it is necessary in keeping the delivery system of the whole stock market prompt and flexible. It may be that the plans now contemplated by the Stock Exchange for the central Uepositing of securities and their handling by security-checks, after the admirable German prac- tice, may ultimately relieve New York banks of their present irksome duties with substitutions, by having these effected in a central security depository. Acceptance of Collateral.—The loan envelope having been prepared in accordance with the verbal understanding concern- ing the loan made at the money desk, the borrower’s messenger takes it to the office of the lender, or may send it thither through the Stock Clearing Corporation. The lending officer 2l See Chapter XIII. p. 359.

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