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 XII. Comparison and security clearance

Collection:: Economics Books

COMPARISON AND SECURITY CLEARANCE 331 Inclusion of Loaned and Borrowed Stocks.—In an earlier chapter it was pointed out that a broker is able to deliver to the purchaser stock which he has sold short by borrowing it from some other broker in exchange for a loan of money equivalent to the market value of the stock borrowed. Such loans and borrowings of stock and their money equivalents are included in the clearance sheet, exactly as if they were sales and purchases. If, for example, Jenkins & Co. had borrowed 200 shares of Crucible Steel from some broker and loaned 100 shares of Union Pacific to another broker, the 200 Crucible would appear with stocks to receive on the left side of the clearance sheet, and the 100 Union Pacific on its right side, with stocks to deliver. The money equivalents or cash exten- sions of these items would appear after them on the sheet, just as with stocks bought or sold. Exchange tickets are exchanged for such loans of stock just as in the case of sales of stock. Even though such loaned or borrowed stocks create a stock balance to receive or to deliver which is settled at clearing house prices, the broker’s check or draft automatically adjusts any inequalities in money arising between the actual price at which the money loan was made, and the delivery price. Indeed, for all we can tell, some of the stocks to deliver on Jenkins & Co.’s sheet may really be loans of stock and some of its stocks to receive may be borrow- ings of stock. Similarly, cleared stocks which have been bor- rowed are afterwards returned through the stock clearance system; in addition the account of a customer may be trans ferred through it from one Stock Exchange firm to another. ‘Economies Obtained by the System.—The tremendous saving in time, labor, and money effected by the clearance of stocks can be illustrated in no more concrete way than by reference to just such a clearance sheet as the above. On the given day the firm has bought 2,100 shares for $209,362.50 from eleven different firms, and sold 2,200 shares for $233,- "15 See Chapter VII, p. 187

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