'The House'

By LOTHBURY rr HE great investment activity which was 1. experienced by brokers and jobbers during 1960 carried over until May 15 this year when the industrial ordinary share market hit its peak.

Since then, as all bull markets come to an end some time, it has fallen away by over 20 per cent. But there has been no slackening of work by that noble unpaid body, the Stock Exchange Council under its able chairman Lord Ritchie of Dundee. In fact much has been done and I have no doubt will be done, firstly, for the benefit of the ever- increasing number of members of the public who are becoming investors for the first time, secondly for the members of the Stock Exchange themselves, and lastly for the improvement of the Stock Exchange machinery, so that it may take its place as an up-to-date and vital link in providing an international market. In June Mr. K M. 0. Knott and Mr. F. R. Althaus were re- elected as deputy chairmen to assist Lord Ritchie, while four new members, Mr. K. J. R. J. Radcliffe, Mr. G. R. Loveday, Mr. J. R. Leroy-Lewis and Mr. G. M. Turner, were elected as new members to serve on the Council. This body of men has to give up a great deal of its time in administering the affairs of the 'House.' I hope the new blood will ventilate their ideas in the rather over- powering panelled Committee rooms.

Perhaps the most important event of the year was the first Conference of European Stock Exchanges, which was held in London last month.

There were forty overseas delegates repre- senting eighteen stock exchanges from twelve European countries. It will be essential when the UK enters the European Common Market that a far wider market be created in the many leading stocks and bonds about which so little is known at the present time on either side of the Channel. Many subjects were discussed, the most important outcome of which was the decision to form an International Federation of Stock Exchanges.

The public gallery does, of course, something to attract visitors who are anxious to see and have explained the working of members and their clerks on the floor of the 'House.' Gone are the days when in times of dullness, such as are now being experienced, mock weddings, cricket matches and baiting those who were good for a leg-pull took place. There is no doubt that the gallery has done much to raise the tone—the young men are doubtless finding their fun else- where.

It is to the up-and-coming young stockbroker that the new investor will have to look for advice in regard to protection of his savings and the wise investment of them. The right advice can only come from those who have an all-round knowledge of markets, can interpret intelligently a balance sheet and profit and loss account, have a sound knowledge of a wide range of industries and also of economics together with some acquaintance with American and European bonds and shares.

Does the stockbroker or jobber of tomorrow have such qualifications and is he required to prove to the Stock Exchange Council that he is a person able to undertake such enormous responsi- bilities?

No, he is not.

It has for a long time been a contention of mine that some such yardstick should be imposed. After all, the trustee departments of the banks and insurance companies are generally staffed by competent men from whom a high standard is expected. To achieve professional status for its members the Stock Exchange would doubtless have to apply for a royal charter and thereby submit to some controls.

But why not?

It would at least debar those young men with plenty of money and little else from becoming members and giving the trusting investor the impression that they are fit and proper persons to juggle with his life savings.

I would go a step further by barring any person not a qualified member of the Stock Exchange and who did not have a financial stake in his firm from being allowed to include his name as a partner on his firm's stationery. This is a most misleading practice. There is also that special breed of half-commission man who tells his bar acquaintances, over a double pink gin, that he should buy 1,000 'Brick Bat' shares as they will be 50 per cent. higher by the end of the ac- count. As often as not the giving of such in- formation or 'tips' is tantamount to misrepre- sentation, more particularly as that individual likes it to be known that he is a stockbroker.

H is of little help to a new investor—and there are thousands of them—to be given by the secretary of the Stock Exchange a list of brokers who are willing to transact his small amount of business.

He would be as well served by his branch Bank Manager, who, after all, merely acts as an agent on 25 per cent. commission in passing the order to the broker allocated to him by his head office.

The best bet today for the small investor who wants a stake in British industry is to buy unit trust units. These are many and varied and since 1958 have attracted enormous savings. During this present market fall unit trust managers have been surprised to find that they have been asked to buy back only a very small amount of units.

So few stockbrokers appreciate the value of unit trusts: not only can they find in them a satisfactory answer to their small clients but they can also at times receive substantial orders from a unit trust (apart from a reciprocal order for their clients' money) to buy stock on behalf of the fund.

The days that lie ahead are difficult ones for all concerned with the investment of money, the financing of industry and the maintenance of the City of London as the financial hub of the world.

I believe that the Council of the Stock Exchange will measure up to these great demands that will be made upon it and will provide, in the not too distant future, those necessary re• forms in its own domestic policy and a lead to other foreign exchanges that will justify its great tradition and fulfil its motto: 'My word is mY bond.'