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 XVIII. The stock exchange as an international market

Collection:: Economics Books

502 THE WORK OF THE STOCK EXCHANGE single great markets. These immemorial tendencies of trade specifically exert themselves through arbitrage between mar- kets. Arbitrage may be defined as a special species of specula- tion based on intervals of space rather than intervals of time, and involving purchases and sales in different markets at the same time rather than in the same market at different times. If, for example, a given security is selling at go in one market and at 91 in another, there will always exist an opportunity simultaneously to buy in the former, sell in the latter, and profit by the difference in prices. Two factors are, of course, necessary in such arbitrage dealings—dependable markets and ready communications. The effect of arbitrage is naturally to keep prices on two different markets in close accord. The technique of arbitrage between the old stock exchanges of Europe had been highly developed long before the nine- teenth century. Also, the establishment of stock exchanges in New York, Philadelphia, Boston, and other American cities occurred early in the nineteenth century, and soon led to domes- tic arbitrage here. At first arbitrage was everywhere risky and intermittent, since it had to depend upon communication by stage coaches and carrier pigeons. The invention of the tele- graph, by shortening the practical time interval between mar- kets, increased and refined arbitrage here and abroad. Within the United States, therefore, arbitrage of one sort or another in securities listed on different American stock exchanges has long occurred, although domestic arbitrage based upon con- tinuous quotations from the floor of the New York Stock Ex- change is now forbidden. More and more, however, there has been a tendency in America for the principal market in our leading securities to gravitate to New York, and owing to the particularly efficient wire and quotation systems of the New York Stock Exchange, its market has been placed effectually at the service of people in practically all parts of this country. But arbitrage across the Atlantic Ocean, involving as it did more serious delays in communication, was naturally slower in TT 1 See Chapter II, p. 39.

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