Stock exchange in Saint-Petersburg… (continuation)
System and Controls of the Stock Exchange.
The Principal organ of management of the Stock exchange was the Exchange committee - the elective body of Exchange merchant class. It was formed initially for supervision over safety of a new building of the Stock Exchange. With the course of time move to it all function of management, the solution of disputes, communication of businessmen and the governments.
Regulations of 1831 have approved behind Exchange committee the functions of commercial court, management of exchange affairs. At first the committee became an operating agency of the general Exchange assemblies. And since 1875 it was replaced by assembly of member of the city duma (80-150 elected persons).
The structure of Exchange committee (it was approved by above mentioned regulations) included 3 merchants and 3 brokers, was presided by “Mayor”, which headed the Municipal duma. The modern control system is much more complex. It has a great number of committees and departments where a plenty of people is working. Specialization in the decision of separate questions is useful, but on the other hand to the persons bearing the responsibility for activity of the Stock exchange as a whole, can be hard, follow actions of each part of the complex administrative mechanism. Collective nature of departments allows considering in more detail problems and questions, than if departments consisted of one person since people have an opportunity to unite the knowledge, experience, to offer some various decisions of any questions. However, there can be disagreements, and the majority is not always right, and the chief can be mistaken, choosing the correct decision.
In all control systems, beginning with Exchange committee, the basic controls were kept: GENERAL ASSEMBLY which selects EXCHANGE ADVISORY COUNCIL (ASSEMBLY of TOWN-COUNCILLOR). It in turn chooses representatives of BOARD (EXCHANGE COMMITTEE). The truth the PRESIDENT, unlike CHAIRMAN, is the person chosen by board, but the post from it has not changed.
We shall consider functions of the above-named controls:
General meeting of members of Stock exchange is the supreme body of management of the Stock exchange. The decision of following questions concerns to its exclusive competence:
- the statement and change of the charter, balance and other documents;
- an establishment of the sizes of all necessary monetary gathering, sizes of tariffs, payments for exchange services, the sizes of penalties;
- election of members of controls of Stock exchange;
- consideration of complaints to the decision of advisory council of the Stock exchange and boards of directors;
- the statement of the order of a payment and official salaries of the personnel of the Stock exchange.
The functions of Exchange Advisory Council of the Saint-Petersburg Stock exchange:
- an establishment of dates and time for Exchange assemblies;
- drawing up and the edition of rules about the order of carrying out of operations with securities, instructions for brokers on conducting books;
- definitions of the form of bulletin of the Stock exchange;
- an establishment of the size, the order and terms of deductions from a commission of brokers and regular customers of the Stock exchange, payments from visitors;
- the sanction of an assumption of securities and the quotation on the Stock exchange;
- the resolution of disputes, operations arising at carrying out with securities;
- reception and exception of members of the Stock exchange;
- estimating of incomes and charges of the Stock exchange and reports on their execution;
- granting to bodies of local authorities and the government of data and the analytical conclusions concerning development of the financial market.
Also some functions of a higher body can be assigned to Exchange Advisory Council of the Saint-Petersburg Stock exchange.
Board of directors is the executing agency of the Stock exchange. To its competence concern:
- the organization and a management of activity of the Stock exchange and its subdivisions;
- development, change and entering on the statement of General meeting of members of the Stock exchange and Exchange Advisory Council the documents regulating its activity;
- a suspension for the period of exchange trade, in case of if the prices of current transactions on the stock exchange deviate quotations more than on certain Stock exchange size;
- the order of property of the Stock exchange;
- the statement and change of the size deposited in a settlement payment of the mortgage and the liquidating credit;
- hiring and dismissal of personnel of the Stock exchange;
- imposing of penal sanctions.
Functions of Board of directors are carried out by executive committee. It is necessary to mention and the Revision committee. It carries out the current control for financial and economic activities of the stock exchange. Its functions are:
- check of a condition of money resources and property, and also office-work of the Stock exchange;
- drawing up of the report to General meeting about results of audit.
Stockjobbing.
In stockjobbing everyone played their own role. “Aces” set mood of day, giving orders to brokers. Their intentions defined actions of others.
If “the weak mood” (the offer exceeded demand), the “side scene” operating at own expense prevailed, hastened to sell the securities then to redeem them, still, more cheaply, but, bankers, waited, the further downturn that forced the speculators who have bought securities in hope for increase, urgently to sell out them. Brokers started to buy the necessary securities; they were followed with “side scene”, buying papers to sell them when the prices will rise.
In a return case “bulls” started to operate. They added the price and bought up securities, selling them after under higher price. But in parallel with them bankers operated also, the prices grew, but by the end of day of the price were usually stabilized.
Platform. Here played on a difference of rates. Some times for Exchange day intermediaries left on platform and informed on movement of the prices. Intermediaries used that their data cannot be checked up, well and clients could refuse the given assignments at any moment.
“American” is a stock exchange on which it was possible at any moment “to liquidate all unprofitable obligations and to disappear in unknown direction”. In the beginning similar assemblies passed furtively on the Neva prospectus - in the street or in money-change shops (for example, Nikitin’s office). Later all took place in extensive convenient premises.
Data about game on modern Stock exchange are not present, but I do not think, that the little changes took place. Always there are those who speculates on downturn/increase and always to own advantage.
Systems of trade.
The System of the trade by securities, since time of separation of stock exchange from commodity one, constantly changed.
Initially all transactions consist brokers at personal presence of people. Large Stockbrokers, appearing, gave orders to brokers, divided operations among themselves and started to operate. But a plenty present, noise and confusion, false movements, demonstrations, sometimes led to some misunderstanding. For example, on the different ends of hall transactions on the same security under the different price consist.
After the conclusion of significant transactions public gathered in some dense circles where there was a trade on running securities. The form of carrying out reminded auction - the prices were specified. Finally established they were considered after the first call. The second closed an official stock exchange.
Full members of the Stock exchange submitted a note about arranged deals which each broker has been obliged to bring in the books and bulletins, but this rule was quite often broken. Operations proceeded on platform where within day intermediaries informed data on the prices, mood, etc., quite often deceiving gathered there, in own purposes.
As there was one more kind of an informal Stock exchange - “American”. Behind the frauds occurred there to follow it was impossible, there were no legal guarantees.
After creation of an official share department not only system of the trade has changed, but also public of an institution. Its valid members - plenipotentiaries of commercial banks, bank buildings and offices - possessed exclusive rights: to operate without brokers, by proxy (no more than one) and improvised (no more than two). Advisory council of a share department consisted of these people and brokers; they informed given quoted commissions for drawing up of bulletins. The right to conclude transactions through brokers had regular customers, persons of 1-st trade guild of Saint-Petersburg. Visitors of a department could be only observers.
(to be continued…)
