The constitution of the Stock Exchange is simple. Governed by a committee of twenty-eight, with a chairman and deputy-chairman, annually elected by the members, their power to expel, suspend, or reprimand is absolute; their decision final; and that decision, adds one of the rules, “must be carried out forthwith.” In cases of expulsion, the committee should not consist of less than twelve; and of these, at least two thirds must concur in the sentence. No bill or discount broker, no clerk in any public or private establishment,—excepting those to the members of the Stock Exchange,—no one in business, either in his own name or in that of his wife, can be received as member. Every applicant must be recommended by three members of two years’ standing, who must each give security for £300 for two years. The committee meets every alternate Monday, at one o’clock; but a special meeting may at any time be called by the chairman and deputy-chairman, or by any five members. Brokers and jobbers, or dealers, as they are politely termed, are not allowed to enter into partnership; and, when a defaulter is excluded, his clerk is excluded with him.
Directly the books are closed at the Bank of England, the price of stocks, excepting only bank stock, is quoted without the dividend.
When a defaulter, or one who cannot or will not pay the just claims on him, is posted, a libel is avoided by the following words:—“Any person transacting business with A. B., is requested to communicate with C. D.”
The rules of the Stock Exchange amount in number to 159, and are calculated to meet every difficulty. The charge to the public for buying and selling English stock is 2s. 6d. per cent.; and the following, taken from the third edition of Mr. Robinson’s valuable “Share Tables,” is the commission on shares:—
| s. | d. | |
| Under the value of £5 | 1 | 3 per cent. |
| Amounting in value to £5, and under £20 | 2 | 6 ” |
| ” ” £20, ” £50 | 5 | 0 ” |
| ” ” £50 and above | 10 | 0 ” |
The terms used on the Stock Exchange have been in vogue for more than a century; and the origin of many may be traced to the early transactions in the stock of the East India Company. Buying for the account has been described; but “bull” and “bear,” “backardation” and “continuation,” are understood only by the initiated.
“Bull” is a term applied to those who contract to buy any quantity of government securities, without the intention or ability to pay for it; and who are obliged, therefore, to sell it again, either at a profit or loss, before the time at which they have contracted to take it.
“Bear” is a term applied to a person who has agreed to sell any quantity of the public funds, of which he is not possessed, being, however, obliged to deliver it against a certain time.
“Lame Duck” is applied to those who refuse or are unable to fulfil the contracts into which they have entered.
“Backardation” is a consideration given to keep back the delivery of stock, when the price is lower for time than for money.