STOCK EXCHANGE SEGMENTS OF THE SECONDARY MARKET IN THE UNITED KINGDOM AND THE REPUBLIC OF IRELAND

STOCK EXCHANGE SEGMENTS OF THESECONDARY MARKET IN THE UNITED KINGDOM AND THE REPUBLIC OF IRELAND

This liberal attitude on the part of the Stock Exchange towards dealings in unlisted securities is an important reason why there is only a very modest volume of "over- the-counter" trading in the United Kingdom and the Republic of Ireland. Another contributory factor is the willingness of the Stock Exchange to list even issues with a low market value. Although two or three times the official minimum market value of h200.000 laid down in the admission regulations  is probably required today, this is still well below the minimum requirements imposed by other major stock exchanges. Other reasons for the small extent of off-exchange business are the long trading sessions and the fact that dealing does not have to take place physically on the floor of the exchanges. Members are allowed to deal by telephone. In London the Exchange is open from 9.30 a.m. to 3.30 p.m. After that time trading takes place exclusively by telephone. These official telephone transactions end at 5.30 p.m.; dealing later than this is basically only prevented by the fact that jobbers cannot be contacted after that time. In principle, it is mandatory for every deal to be transacted with a jobber. That is why the "jobbing system" is spoken of. With one exception the jobbing system has also become established on the provincial exchanges since the merger of 1973. Members of the Stock Exchange are either jobbers, who have no private clients and are "spread guided", i.e. they profit by realizing spreads or turns, or are brokers, who chiefly are "commission guided", i.e. they earn their money through the commission they charge to clients. Jobbers and brokers may not combine together in a single firm; jobbers must work only with other jobbers and brokers with other brokers. Brokers normally execute orders from investors on an individual basis by immediately making a deal with a jobber. Since the broker does not need to hold any securities to do this - and ideally does not hold any - and since, further, he has no knowledge of the counterparty to the transaction because of the intermediary  function of the jobber, he can be a completely impartial adviser and agent to his client, apart of course from the fact that he has an interest in getting his commission.
the source by Dr.Hartmut Schmidt