dealers and brokers, individuals and firms functioning as traders on stock, commodity, and currency exchanges. Exchange traders specialize in specified areas and have available to them extensive information on transactions, stock prices, and the like. The charters of most exchanges do not permit exchange traders to execute transactions for their own account or to sell securities in their own possession. However, in practice these prohibitions are rarely observed.
Exchange traders are usually appointed by the exchange committee, but in some countries (for example, on the stock exchange in France) they are representatives of the government. Present-day exchange traders on stock exchanges usually work out of brokerage offices or firms. These places of business have a hall for their clients, where the latest stock exchange transactions are shown on a screen, and they also have various divisions, such as telephone, correspondence, clients’ orders, and statistics and accounting departments.
Offices that are organized by the magnates of financial capital, or are subordinate to them, play the major role among exchange traders. It is noteworthy that the investment banking firm of Morgan, Stanley and Company, which plays an important role in the USA in the issuance of new securities, at the same time acts as an exchange trader in securities transactions. It realizes its exchange operations through one of the largest monopolistic deposit banks, a bank controlled by the Morgan financial group—the Morgan Guaranty Trust Company.
Besides the exchange traders or their representatives, there are unofficial brokers, or “bilkers,” whose offices are known as bucket shops.
Exchange traders receive commissions (brokerage fees) for their services and advice. On the official exchanges, such commissions are set by the exchange committee at a specified rate dependent on the amount of the transaction.
M. IU. BORTNIK