232 THE WORK OF THE STOCK EXCHANGE
order to carry on its work efficiently and successfully. One
instance of this fact has been the fixing of 100 shares of stock
as the unit for ordinary trading on its floor.
Difficulties with Smaller Trading Unit.—Many practical
-onsiderations have combined to establish this 100-share unit
as a necessity today. The number of odd-lot transactions
occurring upon the Exchange each day is usually as great or
greater than the number of round lot transactions. The flood
of separate transactions which would result from the adoption
of a smaller unit of trading would make it both impracticable
and unprofitable for the commission broker or the specialist to
give that conscientious attention to each individual order which
is now a vital factor in establishing prices fairest to both buyers
and sellers. A smaller trading unit would furthermore exag-
gerate the difficulty of making large purchases or sales of stock
almost past the possibility of satisfactory performance. A
broker, for example, with an order to purchase 10,000 shares—
a delicate and laborious task even with the present 100-share
unit—would find it practically impossible to execute it quickly
and efficiently were he forced to accumulate it by 10-share or
even 25-share purchases.
Other obstacles would also arise from trading in such a
small unit. The banker loaning funds on security collateral
would be forced to receive huge bundles of certificates which
would be hard to safeguard and inspect. Moreover, the full
burden of the greatly increased number of separate transactions
in less than 100 shares would at once descend upon the indis-
pensable stock ticker and largely destroy its usefulness; the
tape would be clogged and delayed with the records of thou-
sands of small and relatively unimportant transactions.> So
often would its quotations be based on a negligible number of
shares that a recorded price would lose the significance pos-
sessed by present prices, which represent transactions in I00
shares. This would be particularly true of closing bid and
TL See Appendix VIIIf.
