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

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter XII. Comparison and security clearance

Collection:: Economics Books

326 THE WORK OF THE STOCK EXCHANGE Employment of Settlement or Delivery Prices.—Accord- ingly, the clearing systems of all the great stock exchanges here or abroad resort to the use of the artificial but very handy device of a “delivery” or “settlement price,” at which all trans- actions in all cleared securities will at first be settled; after- wards, with every firm, an adjustment is made of the differ- ences between the settlement prices it has thus employed and the actual prices at which it really bought and sold. Suppose this is done in the foregoing case, at a settlement price for Reading of 80. A delivers the 100 Reading to C, and C pays him $8,000 for it. Thus A, who really sold it for $7,900 gets $100 too much, while C who really bought it for $8,100 pays $100 too little. But the clearing system knows this perfectly well, and calls upon each of them for $100, which they pay to it forthwith. Meanwhile B is told to draw a draft against the system for his $200, and. this draft is paid from the proceeds of the two checks for $100 already collected from A and C. The New York Stock Exchange settlement prices are fixed by the Night Branch for each day’s transactions, soon after the close of the market. The delivery price for each cleared stock is usually arrived at by selecting the nearest even price (excluding fractions) to the closing bid price for the day. Consequently, the settlement price on a closing bid of 7918 would be 79, or on a closing bid of 7954 would be 80. Some- times, in the less active stocks, the price of the last sale is used, when the closing bid price is too weak to furnish a satisfactory basis. Thus, when the last sale of such a stock has been made at 86, and its closing bid and asked prices are 82-87, the delivery price might be made at 80. Preparing for the Night Clearance.—All day long, as transactions are entered into by Stock Exchange members on the floor, they are reported back to their offices. Transactions in cleared securities are entered on the “clearing blotter” and exchange tickets dispatched to the other parties to each trade. When the corresponding exchange tickets from these respec-

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