The property of the Stock Exchange is under the control and administration of nine trustees and managers, who are ap pointed by the shareholders. Every five years three retire, and are eligible for re-election. If two vacancies occur they are im mediately filled, but in the case of one vacancy it is not filled until the annual meeting. The trustees and managers have no control over business transactions on the Stock Exchange, which are in the hands of the committee for general purposes, number ing 3o members, who are elected annually. This body regulates the transaction of business on the Stock Exchange, makes others and repeals rules and regulations for the same, is charged with the admission and discipline of members and their clerks, and is generally responsible for the good order and government of the members. Its work is so heavy that sub-committees are formed to deal with particular matters.
Securities cannot be dealt in on the Stock Exchange except by permission of the committee, and conditions have to be fulfilled before that permission is granted. This is one of the most important new rules of the Stock Exchange. Before the war any security could be dealt in without the permission of the com mittee, and all that the latter were called upon to do was to fix a special settlement for the completion of the first transactions. Sometimes weeks would elapse before a special settlement was applied for and granted, and sometimes none was applied for or granted. Grave abuses occasionally arose in connection with the marketing of new shares in this way. This licence to deal has been abolished, and the interests of the public are much better protected than they used to be. The discipline of the stock ex change is very strict and the committee deals severely with any members guilty of improper conduct. The committee settles dis putes between members and also between members and their clients. It has power to suspend or expel a member. Member ship is for 12 months only, and thus everyone who wishes to re main a member must apply to the committee for re-election. The year ends on March 24. An important innovation was made in the year 1904, when it was decided to restrict the growth of membership. Prior to that date it was possible to become a mem ber without the nomination of a retiring member. As a result, in active times membership rapidly increased, and when dull times came the competition for business became extremely keen. The rule passed in that year virtually stopping the growth of mem bership is the most important rule affecting the Stock Exchange passed in the present century. In the ordinary way the only method by which a person may become a member is to obtain a nomination (by purchase) from an existing member who must retire in his favour. Nominations may be obtained from a former member, or, if he has not disposed of his nomination, from the legal personal representative of a deceased member. Nomina tions, which are personal and non-transferable, are usually pur chased, and the cost may be as high as £2,000. To-day (1928) the cost is about L1,150. A candidate for membership must be recommended by three members, who become sureties for him during the first four years in £500 each, or L1,5oo altogether. A certain number of clerks who have completed four years' service are admitted each year without nomination. The number of such admissions is left to the discretion of the committee; in 1927-28 the number of such new admissions was 20.
The fact that the Stock Exchange is owned by the shareholders and controlled by their elected trustees and managers, while a separate body, the stock exchange committee, appointed by the members, controls and regulates business, has constituted what is known as dual control. The committee has no funds of its
own and cannot initiate or control the expenditure of the money subscribed by the members. While the arrangement has worked remarkably smoothly, it is nevertheless anomalous and various efforts have been made to terminate it. But none of them has succeeded. Since Nov. 23, 1904, every member admitted with two sureties has been obliged to become the owner of at least one share and every member with three sureties must hold three shares; under this arrangement the dual control is not likely to be abolished for a long time to come. One of the most interest ing innovations on the stock exchange has been the introduction in 1928 of a pension scheme for members' clerks. The scheme was floated by the Clerks' Provident Fund with the blessing of the committee, but it is really unofficial and voluntary. Members, however, have generously supported the scheme, which in time will no doubt be generally adopted.
The London Stock Exchange contains two notable monuments, the Boer War memorial and the memorial to those who fell in the World War.
By custom, each market has a special place allotted to it ; for instance, the space immediately in front of the World War memorial is the market for British Government securities and other gilt-edged stocks. Dealers or jobbers in these securities take up their posts in this space every day, and dealers in other classes of securities similarly occupy the floor space allotted to their particular markets. In this way the locality of a market can be readily and easily found by the brokers who go to the house to buy or sell securities for their clients. There is an important distinction between brokers and dealers. Brokers are not allowed to deal on their own account, nor can dealers act as brokers. Their functions are defined by a rule which was last amended in 1908 and took effect as from Feb. 1, 1909. The dealer or jobber occupies a position similar to that of the wholesale dealer in commodities. He keeps a stock of particular securities, say oil shares, and his function is to buy oil shares when they are offered to him and to sell them if they are wanted. He quotes two prices for a share, a buying price, which is the lower, and a selling price, which is the higher, and the difference represents his profit. A broker acts for the public which desires to buy or sell securities. Ordinarily, both for buying and selling securities, though under certain circumstances only for buying, a commis sion is charged. On receiving an order to deal in a certain security, a broker goes to a jobber in that market, and asks for a price, mentioning the amount of stock which he desires to deal in, but he does not disclose whether he is a buyer or a seller. The jobber "makes a price," i.e., gives two prices ; at one he is pre pared to buy and at the other to sell. If the broker is satisfied with the price, or if it conforms with the price limit fixed by his client, he will tell the jobber that he sells or buys as the case may be, at the price quoted. On the other hand, if he is dis satisfied, the broker will ask for a closer price, and if the jobber is anxious to do business, will make a closer price, and the bar gain is then made. A jobber's business requires special qualifica tions. It has been said that a jobber is born, not made. There is much truth in this. The most successful jobbers have a flair for the business. They must be men of good nerve, cool judgment, and ready to deal under any ordinary conditions. They must be men of financial standing, considerable experience, with an under standing of market psychology.