Big Board, The (1958)

institutional investors kept we got bigger and busier and busier [Music] our exchange Community has grown since 1792 to more than 1350 more than 650 member firms more than 2500 offices more than 64,000 people handling the orders that funnel into this Central Market where financial institutions direct a great volume of transactions to buy and sell listed [Music] Securities each minute the Institutional Investor has an average of $112,000 of new money to invest $112,000 a minute there are a good many ways that institutional investors are taking best advantage of this versatile Market created by broad public participation and because most of your orders are executed in the regular auction Market let's take a closer look at it starting with a quick rundown on The Men Who transact your everyday business on the [Music] floor these member floor Brokers for instance who are usually Partners in the member firms trading for you at the post where the stock you want to buy or sell is assigned two or more Brokers trading in an issue we call a crowd The Specialist whom you can pick out because he frequently refers to this book the reporter Who records transactions reported to him by the seller and sends the stock symbol size and price to the ticker Governors and floor officials Who oversee all trading Activity The Specialist Clerk and the broker's clerk whose telephone links the floor through the order room to the man you know best your own broker because you and he are both professionals your member broker can help you make the best use of the market in carrying out your investment decisions suppose you had an order of moderate size it could be handled all at once or in a flow-in flow out series of transactions the auction Market is the place for it here's what would happen your order is relayed to the clerk on the floor who calls for the firm's floor broker by flashing his number the broker goes to his Clerk and picks up the [Music] order he goes to the post gets the quote and joins the crowd as other Brokers bid or offer with him he States his offer in a loud clear voice the S is made and recorded there are no written contracts the broker's word is enough [Music] news of the sale is sped to the ticker and word is sent to your member broker he reports to you that your order has been executed but your broker also knows that your needs may be different more complex possibly the block is a large one or maybe you want more speed your firm's floor broker may decide to enlist The Specialist each specialist handles an average of 11 stocks with Market activity constantly flowing around him the specialist performs the first of his two important functions acting as a broker's broker when your floor broker cannot immediately complete an order at an acceptable price he can entrust the order to the specialist who then becomes a member of your Market team obligated to get you the best price he can the order is then entered in This Confidential book here's the way it works at each price level he enters in sequence the orders that Brokers leave with him when this order is finally executed The Specialist will cancel the entry and notify the broker the specialist's work his records and his books are continually checked by The Exchange [Music] because he knows his issues because he knows the market The Specialist is able to perform his second job helping to keep that Market Fair and orderly though stock prices rise or fall because of Supply or demand it is the specialist's function to keep the spread between bids and offers and price variations between sales as narrow as circumstances will permit as a result these usually buying for his own account when the market is falling or selling when the market is rising but he may buy or sell only when there is no public order on his book at that price but this flexible Market is also designed to accommodate the marketing of large blocks in weighing your joint decision your broker may know that there is more stock available than the quoted Market shows because he is in such constant touch with the activity on the floor but beyond this he can also help institutional investors buy or sell with seven special block procedures The Specialist block purchase or sale are procedures you and your broker might be able to use in the specialist block purchase the floor broker is responsible for executing your [Music] order though he transacts it on the exchange floor it is not a part of the regular auction Market your broker offers your block to the specialist who consults his book and makes a net price bid somewhat away from the current auction Market here as in all special procedures exchange approval must be obtained before the transaction can be completed this can usually be done very quickly [Music] when a specialist block transaction is completed there is no print on the ticker your broker earns a single [Music] commission The Exchange distribution or acquisition are other procedures you might use in an exchange distribution your broker goes to work to round up the buy orders you need when the necessary total has been accumulated the orders are then crossed in the auction Market the seller pays all brokerage costs there has been no Advanced publicity but after the cross is made word of the exchange distribution is carried on the ticker you might decide on the special offering or [Music] bid when you use the special offering your broker sends out notice in advance the ticker carries word to buyers in 600 cities and quickly brings to the market the buy orders you need the buyer gets his stock net price the seller pays commission to the buyer's broker the secondary distribution like a new issue allows your broker and other brokers in the Securities industry to buy portions of a large block for resale to the public or for their own accounts usually after trading hours the buyer gets his stock at fixed net price no commission so to help buy or sell large blocks of stock the New York Stock Exchange offers the Institutional Investor a choice of seven special block procedures four on the cell side three on the buy [Music] side seven special procedures supplementing the flexible Central auction market and when you use the regular auction Market there is no need to split up your block you may designate one broker to execute your entire order but you may still direct him to share the commission with other member firms this is one way to keep the price from getting away from you on the floor however let's assume you insist upon dividing your block among three Brokers you give this broker the first part of your order to sell there's a downt after the execution is reported to you you give the second part of the block to another broker another down tick and the third part to steal another broker [Music] you just become Your Own Worst Enemy one broker completely in your confidence knowing exactly what you wanted could have been much more efficient but the real test of a Market's efficiency is not how it operates when things are going well but how it functions when something unexpected happens [Music] in times of Crisis The Exchange is open every minute of every business day its member firms are available to customers their lines are open to the floor the Specialists are at their posts ready to team up with your broker ready to do their part in meeting the exchanges objective to keep the market [Music] orderly the emergency passes [Music] the auction Market created by public orders responsive to your needs Man by experts it is Central flexible liquid each day this Market handles more than $125 million in buy and sell orders its special procedures its experienced Market teams provide you with all the techniques all the services to carry out your investment decisions