The Stock Exchange

The Stock Exchange is a market place where the Government and private industry are able, by the issue of new stocks and shares to raise money to finance their operations. It plays a vital part in the national prosperity, not only by providing some of the finance for the investment necessary for industrial expansion, but also by attracting foreign exchange into Britain.

History. The Stock Exchange evolved in London during the seventeenth century from informal gatherings of stock and share dealers in the coffee houses around the Royal Exchange, Records of daily price diets go back as far as 1698, and among the stocks listed then were the New River Company and the Hudsons Bay Company, which still feature in today's Daily Official List.

The First Stock Exchange building, situated near to Threadneedle Street was taken over in 1773, and the Market moved to part of its present site in 1801. A new Stock Exchange building on the same site was completed in 1973.

At the time of the railway room in the nineteenth century other, Stock Exchange opened up outside London. In 1965 these, together with London, formed the Federation of Stock Exchange in Great Britain and Ireland. In 1973 they joined together to form The Stock Exchange with trading floors in London, Birmingham, Manchester, Liverpool, Glasgow and Dublin. In addition, there are brokers' offices in many other towns and cities throughout the United Kingdom and the Republic of Ireland.

Membership. Today the Stock Exchange is made up of some 4, 000 individual members. To be elected, a person must be 21 years of age and must have served at least three years with a Member Firm. A candidate must also have passed a qualifying examination. The 4, 000 Members are grouped into approximately 275 firms divided between London and the rest of the country. Firms vary considerably in size from those with 40 partners and 500 staff to some consisting of just 2 partners and a staff of six. In all, more than 15, 000 people are employed by Stock Exchange firms in many cities and towns throughout the United Kingdom and the Republic of Ireland.

Members are divided into two distinct types: Brokers and Jobbers Brokers act as agents for the public, advising then on their in vestments, and receiving instructions from their clients regarding the buying and selling of shares. They do not charge a fee for their advice but receive a commission on business transacted.

Jobbers do not deal direct with the investing public. They are concerned with buying and selling shares to brokers, who are acting for clients. The jobbing system which is unique to this country, ensures a fair price to buyers or sellers of securities.

Dealing in the House. Historically, dealing has been the central function in The Stock Exchange both for Brokers and Jobbers. It is the dealers and their clerks whom you can see about their business from the Visitors' Gallery.

For the Jobbers, who make their living by their skill in dealing, this is still so. The ability of their dealers is all important.

The Brokers, however, must be able to offer a wider range of services to their clients. So although dealing is a vital part of their work other functions are also very important.

Administration and Accounting. The processing of Stock Exchange transactions through the settlement procedures occupies probably half of the 15, 000 or so people working in Stock Exchange firms.

The value of business done amounts to several hundred million pounds in a day, and if his is not promptly and accurately settled the effects both on the Firms' finances and their clients' affairs would be serious.

The efficient operation of the offices, is essential both to Brokers and Jobbers.

In the past the great bulk of the paper work was dealt with by clerks working under the direction of an Office Manager who had himself spent a lifetime as a skilled clerk. Today, in most Firms, these same functions are carried out using modern equipment, such as computers. There are opportunities for young men and women with a wide variety of qualifications ranging from qualified accountants or computer staff to office juniors, to find interesting employment with good chances of advancement.

Investment Research. The third main area of employment in Stock Exchange Firms is in that part of the office that carries out investment research and gives advice to clients.

There is a wide range of activities carried out in this area. Junior staff will often be engaged at the start in a good deal of routine record keeping, maintaining files of companies published figures keeping up to date the record keeping, maintaining files of companies' published figures, keeping up to date the records of clients' portfolios, and periodically valuing them both for capital and income. These two streams of information come together on the desk of the person who is in touch with the client, advising him and helping him reach his investment decisions.

The material gathered and recorded about companies' records, published figures, and prospects, is also used to prepare analyses of industries and individual companies, and to draw comparisons between companies in the same industry and between those in different industries. Often this requires that the published figures have to be broken down, analyzed, and possibly even recalculated, if these comparisons are to be valid.