Security transactions continue to be for cash only, and the client has to deliver or to take delivery right away as before. The actual physical transfer of the securities from one broker to the other, however, only takes place once every two weeks, thus eliminating a considerable amount of clerical work.
A further step in the same direction would be the establishment of central safe deposit company for securities which would eliminate physical deliveries between brokers altogether, and would, moreover, cut out the expense which the broker now incurs for depositing his securities with a safe deposit company or with a bank. This proposal, which is modelled on the German security clearing banks, is now under study by the Stock Exchange; since it is favoured by the S.EC. its final acceptance seems probable, in spite of the resistance of the banks, which stand to lose a good source of income.
In addition to these measures, individual firms are trying to reduce overheads by pooling their clerical work. Twelve of the best known smaller Stock Exchange firms in New York are now contemplating such a move. It is claimed that it would reduce their costs by as much as 30 per cent; but it is difficult to see how any firm can maintain its independent identity under such a system for any length of time.
Text read from the printed page and cleaned; old type leaves the occasional error.