Word: haack
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...CUTTING THE PAPER. This is the most pressing problem at present, but also the one that the exchange, under Haack, has gone farthest toward overcoming. It is slowly phasing into operation a Central Certificate Service, which will transfer stocks from one brokerage account to another by making electronic bookkeeping entries. That will end the archaic system under which messengers now lug bags of stock certificates between brokers' offices in the Wall Street area. This week the exchange also will show off to the press a new computerized system for matching the institutions' big buy-and-sell orders. Next...
...automation on the exchange, that still has a long way to go. Haack figures that the brokers can now "comfortably" handle a daily volume of 10 million shares. That is 23% less than the average volume they actually had to struggle with in 1968, and 72% less than the average daily volume of 36 million shares that Exchange Economist William Freund now predicts may be achieved...
...shares daily changed hands on the Big Board last year, or 21 times the total that exchange officials once expected to be reached in 1980. A rising proportion of the trading is done by institutions, for which the exchange's trading mechanisms and commission structure are ill adapted. Haack estimates that institutional trades now generate 50% of all commissions on his New York Exchange. Whether the exchange can hold this business against rising competition from other markets, such as regional exchanges, and whether it can handle the still greater trading volume that is sure to come in future years...
...please anyone. The Justice Department advocates scrapping the brokers' jealously guarded system of fixed minimum commission rates -which now range from $6 to $75 for every 100 shares traded, depending on price-and letting every broker charge whatever he can persuade customers to pay. The idea horrifies Haack. He contends, probably rightly, that it would discriminate in favor of institutions, which have the bargaining power to drive down rates, and against individual investors...
...Haack is no defender of the tradition of setting commissions so high that they enable even inefficient brokerage houses to make money and the most efficient ones to make barrels of it. Donaldson, Lufkin & Jenrette, a house that specializes in institutional orders, has consistently had a profit margin of 50% before taxes under this system. Individuals can make more money with less work on Wall Street than almost anywhere else in the economy. Some neophyte brokers earn commissions at a $50,000 annual rate within six months after graduating from a training course, and veterans fairly commonly make...