Wall Street: Speeding It Up

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The nation's securities markets last week resumed their normal trading hours, staying open until 3:30 p.m. after six weeks of closing at 2. As intended, the shortened sessions helped bring about a drop in the heavy trading volume that had swamped brokerage-house clerical staffs. Average daily volume on the New York Stock Exchange fell 24.5% to 9,639,118 shares, as against 12,764,872 shares during the first three weeks of 1968. On the American Stock Exchange, volume shrank by nearly 50%, from 8,039,660 shares a day to a mere 4,622,004.

A growing watch-and-wait mood among investors, who are nervous about the economy and Viet Nam, unquestionably contributed to the lower volume. For the straining back-office staffs who have been putting in grueling hours to overcome the paperwork logjam, that was just as well. A seven-man committee of industry leaders reported that since shortened hours went into effect Jan. 22, there has been a "substantial" reduction in the number of delivery failures among brokers. Such "fails" generally occur because brokers are unable to obtain stock certificates within the five-day period (raised last month from four days) allotted for payment and delivery after every securities transaction. The problem—still far from solved—snowballs, and as a result, customers sometimes wait weeks for the stock certificates, order confirmations, account statements and dividend checks that they once got in days.

Trailblazing. Last week the stock-brokerage firm of Goodbody & Co. took a trailblazing step toward the obvious remedy: more automation. It put into operation a new electronic system to speed the reporting of buy and sell orders from the floor of the Big Board and the American Exchange to its own back offices. Manufactured by the Bunker-Ramo Corp., the new equipment resembles a miniature television receiver mounted on a small adding machine. It enables floor clerks to send the details of every transaction to the offices at a rate of 110 characters per second, more than ten times faster than the tele typewriter it replaces.

To minimize errors—a major problem in back-office operations—the machine displays each message on its video-type screen so that the clerk can proofread it before pushing the "transmit" button. Best of all, the data is fed directly into a computer that automatically relays it to the proper branch office. The system thus eliminates one of the most time-consuming aspects of back-office paperwork: matching buy and sell reports from exchanges with each customer's original order and passing the word along to the salesman.

End of the Certificate. Many other large brokerage houses are w making—or planning to make—similar strides, but none of them If! deals with the worst culprit in the back-office mess: the stock certificate itself. Most transactions call for the physical transfer of stock certificates among firms or customers. Yet at present, certificates cannot be processed by machine; they are counted, sorted, alphabetized and routed as they always have been—by hand.

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