The jobbing system

Thejobbing system

Modifications for block transactions and in other

circumstances where spreads are wide

at his bid or, respectively, at his offer. There are

limits to this,however. An order may be so large that

the jobbing firm cannot assume the risk of the position

arising from an immediate execution of the order; since

jobbers themselves have no direct contacts with

investors,their opportunities for rapidly running down

large positions are limited. Even if the jobber is

willing to take up the position, his quotation will

necessarily vary according to the size of the transaction

and the point will eventually be reached at which the

broker holding the order will ask himself whether, in the

interests of his client, he should forgo the immediate

bargain and try to discover, by asking other potential

buyers,whether they are interested in doing a deal

and,if so, at what price. A broker, however, who feels

that the price offered by a jobber is not good enough,must

1.find out from the jobber the prices he is quoting

The jobber as broker In the case of securities which are seldom traded, it will often happen that the jobber immediately executes

only part of a normal-sized order, taking on the

remainder of the order as agent. He then tries to find

a party on the other side. For his broking services

he receives a reduced spread. He may alternatively

accept the entire order in the capacity of agent.

2.Trading without jobbers

As stated  .bove under 1b), any broker is free to

execute orders on foreign markets or on the Eurobond

market if this is of advantage to his client. Apart

from these instances, there is in general no way of

bypassing the jobbers. This principle does not apply

to certain Irish stocks, however, particularly

Irish government stock, even though there are jobbers

who trade in such securities. Also of course, all

securities for which no jobbers exist may be dealt

in broker to broker.

a)  The "callover" system

The Irish Administrative Unit in Dublin has no jobbers

but instead publishes a price list covering 277 titles.

Just under a third of these securities are regarded

as active. These market leaders are "called over" each

day in a specific order by a stock exchange official.

After the name of a stock is called out, the represent-

atives of the  19 firms trading on Dublin's stock

exchange may bid and trade in that stock. Then the next

issue is called over. The individual prices produced

by this method of dealing are then published in the

Irish Administrative Unit's official price list.

Some of the securities dealt in in Dublin have a

jobber in London. Before a broker trades in such a

security on the floor of the Dublin exchange he must,

for the best advantage of his client, find out the

current quotation in London in order to ensure that the

client's order is executed at the best available price.

If a broker wishes to deal in one of the close to

200 shares that are not regularly called out, he may

request that the share should be called over and then

try to find the other side to his order.

b)  Other methods of trading without  jobbers 

A decisive  factor determining the method of  trading 

to be used is whether

1.  the transaction  involves  listed securities or

those unlisted securities  that may be dealt  in 

without  a Stock Exchange  listing, or whether

2.securities other than those mentioned  in  are  involved. 

Even  for issues  in the first category  there  is not

always a jobber, so an interested broker will have to

make enquiries on the floor of the house or by  telephone 

around  the offices  and among his clients  to find a

buyer or seller.

A broker may trade in securities of the second  category 

only if each individual transaction has been  permitted 

by the Council of the Stock Exchange. Transactions  of 

this kind mostly involve the shares of small  domestic 

companies.

It depends on the market-knowledge  and  

resourcefulness  of the broker whether he  finds a counter-

party himself or through third parties. It is also

possible that he should act for his own account.

Usually  two broking firms are involved  in  transactions 

of this kind.

In principle, a jobber buys or sells any amount of stock 

 the source by Dr.Hartmut Schmidt