Bank back-scratch
Do you know that if you ask your local bank manger to buy a few shares he sends your order to his head office who in turn tells a stockbroker to fulfil this individual instruction?
Needless to say, dozens of both buy and sell orders for any individual share originate from the hundreds of branches of what is left of the old big five banks. A nasty tradition is maintained to the advantage of stockbrokers and jobbers that each of these individual orders is separately fulfilled, and that buy and sell orders are not set off against each other by the bank's share department with, one would imagine, enormous savings which might be passed back to the little people who are their customers. The banks go so far as to pass a buy order to one stockbroker and sell order to another, not even benefiting by the saving of commission.
Needless to say merchant banks set off all transactions, only dealing through the market to adjust their final position. Though I doubt if much of this saving is passed back to their smaller customers.
Now that the joint stock banks have been allowed greater freedom to compete for deposits I hope they will cease this mutual City back-scratching, bother less with stockbrokers and jobbers, and allow some of their small customers the co-operative advantages of dealing through a big organization.
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