STOCK EXCHANGE. The place ap pointed for the purchase and sale of stocks and shares. It is situate in Capel Court between Threadneedle Street and Throg morton Street. The London Stock Ex change is the most important in the world and the number and amount of the trans actions that take place here in the course of a single day very great. As other stock exchanges are managed on somewhat similar lines, it will suffice to give a few particulars of this one.
The business of the " House," as the Stock Exchange is termed, is split up into the different " markets," or classes of securities dealt in, as those of Consols, colonial stocks, corporations, foreign govern ments, home railways, foreign railways, banks, industrials, mines and others.
The dealers engaged are of two kinds, stockbrokers and stock jobbers, who must all be members of the Exchange. The former deal with the outside public, taking their clients' instructions as to buying and selling, and themselves doing the actual business with the jobbers, selling to them the securities their clients sell and obtaining from them the stocks and shares their clients buy. Thus the jobbers are merchants and act as middlemen between those brokers who have stock for sale and those who wish to purchase ; and the method in which they make their profit is different from that of the brokers, for the latter are paid by the com mission, at so much per cent. or per share, which they receive from their clients. whilst the jobbers take the " turn " between the price they give for a stock and the rate at which they sell it again.
On receiving instructions from his client a broker buys so much stock from a jobber or sells so much to him, as the case may be, at the price which he offers, subject to the client's " limit " ; he then sends his client a contract note which, amongst other par ticulars, quotes the settling day when the price is due to be paid. A large proportion of the Stock Exchange business is speculative, however, and the price is not paid ; instead, if the transaction has been a purchase and the stock has risen in price by the time settling day arrives, the client may request his broker to sell again and the broker will then merely send him a cheque for the profit on the " deal." (See Buff, AND BEAR.)
In most stocks there are two settlements per month, one near the middle and the other near the end ; for Consols there is one day, near the beginning of the month. A transaction that is to be completed on the settling day next following is known as one " for the account " ; there is also much business done " for money " oI " for cash," that is, for immediate payment. (See SETTLING DAYS.) If, on settling day, the client does not wish to complete a purchase, the broker will by arrangement carry over the bargain until the following settlement again, charging a contango for the service. (See CONTANGO.) In order to find the money to pay for stocks bought in this way for clients who do not pay on settling day, the brokers frequently borrow from their bankers, lodging as security the stocks in question. The margin in the value of the security beyond the amount of the advance varies with the class of stock ; the period for which bankers arrange such " stockbrokers' loans " is till the next " account "—i.e. the next Stock Exchange settling day, at which time the amount of the loan, margin, rate of interest, etc., must be rearranged.
For the sake of brevity some stocks quoted on the Stock Exchange are occasionally referred to by brokers and in the press by abbreviated names ; some arc readily dis tinguishable, but it may be Nvell to mention a few of the more important : Anglo A = Anglo-American Telegraph Co. Deferred ordinary stock ; Bags = Buenos Ayres Great Southern Railway ordinary stock. Berthas = London, Brighton and South Coast Railway Deferred ordinary stock. See BERWICKS, BRIGHTON A, BRUMS, CALEYS, CANPACS, CHARTEREDS, CHATHANIS, CHOPS, CLARAS, DISTRICTS, DORAS, DOVER A, EASTERNS, KAFFIRS, KANGAROOS, LEEDS, NORAS, POTS, SOUTHS, TRUNKS, WESTERNS, YORK PREFERRED, YORKS.
The principal foreign stock exchanges are New York, Paris, Berlin, Vienna, Frankfort on-Maine, Brussels, and Amsterdam. In many places stock exchange business is conducted at the Bourses. (See BOURSE.) (See ACCOUNT, BACK\VARDATION, BEAR AND BULL, CARRYING OVER, CONTANGO, CONTRACT NOTE, MAKING-UP PRICE, OFFICIAL LIST, OPTIONS, QUOTATION ON LONDON STOCK EXCHANGE, SETTLING DAYS, SPECIAL SETTLEMENT, STOCKBROKER, STOCK JOBBER.)