becomes a jobber in " the American market," or in the " South
African market," or in the " Consols market "; or in any other
market which he chooses. At the beginning of his career he
usually has to rely for business on such friends as he has made
in the house, while serving his time as a clerk to a broker; but
if he shows ability for the work he soon becomes known to a
wider circle and may eventually make for himself a position of
considerable importance in the house. A jobber's method of
doing business is simple in appearance. All he has to do is to
remain in or near that portion of the Stock Exchange where
other jobbers in the class of stocks he is concerned with congregate, during the greater part of the day, and wait for brokers to
propose transactions to him. If he is in the Home Railways
market and a broker tells him that he wants to deal in, say 1000
" Easterns," meaning Great Eastern ordinary, he replies that
they are 80 to 80¼, or whatever the price is at the moment; this
means that he will sell at the higher and buy at the lower of these
prices the amount of shares mentioned, not knowing " which
way " the broker wishes to operate. On the latter saying that
he will sell, or buy, as the case may be, the bargain is made, and
is noted by both parties in memorandum books for completion
at the next " settlement." The broker is understood to be,
and usually is, acting for a client outside the house, and is paid
for his trouble by a brokerage fixed by rules and paid by the
client. The jobber's profit consists in the " turn," that is, the
difference between the two prices quoted. But it is obvious
that the realization of this profit by the jobber depends on his
being able to effect a counter-sale, or purchase, with some other
broker in 1000 " Easterns," and it is in so fixing the prices he
quotes that, on the average of the day's or fortnight's transactions, his book shows a balance on the right side that his
ability is displayed. If he has sold the stock and has not got
it on his books already, he must procure it by the next settlement in order to deliver it; if he cannot procure it he must
borrow it (backwardation). If he has bought it he must
pay for it by the next settlement, and should it have gone down
in the interval he will evidently have made nothing on the
transaction, so far as that settlement is concerned; he will have
the stock " on his book " and will have to carry it over (contango) and wait till someone wants to buy it of him in order
to " undo " the bargain. If he is possessed of capital he may
pay for and hold the stock until its price has risen considerably,
but as a rule a jobber tries to make quick profits. A jobber is
not obliged to make a price, and in times of serious trouble the
weaker ones among them refuse to do so, or merely stay away.
A jobber has another defence against the risk of making a bargain which he thinks he will not be able to " undo " promptly;
he can quote a " wide " price, that is, he could quote for
1000 " Easterns " " 79½-80½," a price no broker would be
likely to deal at. The extent of a jobber's business depends on
the reputation he has acquired. Good brokers, in their own
as well as their client's interest, always " pick their man,"
especially in times of danger and difficulty. A broker may be
acquainted with several men in a particular market any one of
whom he considers quite safe to deal with in ordinary times,
but he will be very careful whom he chooses to execute an order
with, when, owing to money being dear, or for some other
reason, markets are " bad." The usefulness of the jobber has
from time to time been denied by critics, who have pointed out
that in other stock exchanges no differentiation of members
into brokers and jobbers has taken place. It has also been
alleged that his " turn " is too easily earned, which is not true,
and that it is often too large; as to the latter statement, it may
safely be said that no jobber who habitually quoted prices which
were too " wide " would get much business.
Since 1900 a controversy has arisen as to the propriety of
jobbers dealing direct with members of country stock exchanges,
Dealings
with
" Outside "
Parties. and of brokers dealing direct with financial houses
with known to have certain shares to sell. The difficulty
as regards the latter chiefly affected the mining
share market. It may be argued that both parties
are wrong according to the letter of Stock Exchange law,
but their action can be defended. The broker who goes for
a particular share direct to a financial house (colloquially called
" the shop ") may get better terms for his client, and though
he also gets a second commission for himself, provided he makes
known this latter fact to the client, the transaction is an innocent
one. The jobber's action in regard to provincial stock exchanges,
known in Stock Exchange slang as " shunting " business, may
be regarded as a rough compensatory operation for loss of business he may incur through the broker's desertion of him for the
financial houses. The quarrel would not have arisen but for
the great increase in the members of the Stock Exchange and the
fact that business during and for some years after the South
African War was insufficient to give a living to so many
competitors for it.
The hours of business on the Stoik Exchange have varied
little since the early days of the institution. They now begin
at 11 a.m. and end at 3.30 p.m. on ordinary daysDaily
procedure. except Saturday, but the house remains open until 4 p.m. On Saturdays the closing hour is 1.30.
During the settlement (see Account) the house is kept open till
4.30 p.m. Bargains are " marked," that is, the prices at which
they are " done " are recorded in the official list, between 11 a.m.
and 3.30 p.m. on ordinary days, and 11 a.m. and 1 p.m. on
Saturdays; the marking of a bargain is effected at the request of
the broker who made it; whenever investment purchases are
made a large proportion of them are usually marked, as brokers
like to be able to show that they did the business at the price
stated in the " contract note " sent to the client. The amount
of trouble a broker takes for a client is not always realized.
An investment order gives much more trouble to a broker than
a speculative order. In the former case the broker after arranging the purchase or sale has to perform various operations before
ths whole transaction is complete. He has to procure transfer
forms, get them properly signed and witnessed, obtain the
certificates, if the security dealt in is registered stock or shares,
or the bonds if the security is " to bearer." There may be delay
in the delivery of securities bought for which he is not responsible,
but for which he may be blamed by an inconsiderate client. In
cases of serious and unreasonable delay a broker has the drastic
remedy open to him of calling upon the officials of the " buying-
in and selling-out department " to buy the stock at whatever
price may be necessary, the other party, that is, the jobber with
whom he dealt, paying any difference between the agreed price
and the price at which the security was " bought-in." Inscribed
stock may be bought in on the day following the day specified
for delivery of it. Bearer securities not punctually delivered
may, in some cases, be bought in on the day they were due for
delivery. Similar rules apply to unreasonable delay in payment
for securities sold, which may be ended by a demand that the
Stock shall be " sold out." These rules are intended for use in
extreme cases, and are not often resorted to.
Every bargain which a broker executes for a client is understood to be " for the account," unless otherwise specified; that
is, the completion of the bargain is understood asThe
Settlement.
intended to take place on the next " settling day."
There are two settlements in securities generally,
and one in consols and British government securities, India
stock, &c, each month (see Account). The interval between
two settlements varies from 12 days to 19 days, but the normal
interval is 14 days, and the settlement is usually spoken of as
" the fortnightly settlement " or " account." In most securities
it would not be easy to deal " for money," that is, to obtain cash
or stock on the day of the transaction; but this can always
be done in consols and other British government securities;
" money " bargains in these are sometimes very numerous. Of
late the practice of dealing in consols for next ordinary (not
consols) account has become fairly common, and is now
recognized officially.
All bargains for sale or purchase of stock are supposed prima facie to be investments, that is, the form of contract is the same in all cases. But if a client has bought or sold speculatively he will when the settlement arrives either " close
