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A few weeks ago, under pressure from the Securities and Exchange Commission, the New York Stock Exchange reduced the fees on trades of more than 1,000 shares, dropping them from an average .89% to .84% on the value of each transaction. This will cost the brokers about $150 million in commissions next year, or roughly 7% of what they might have expected to earn on the big trades. Oddly, to make up the difference, brokers are clamoring for an increase in commissions on trans actions of fewer than 100 shares. Such commissions range upward from a minimum of $6.
Yet no one need weep for the brokers or their firms. Though profits on commission transactions will be off from last year, the average 16% that the firms earn on invested capital compares well with any other line of U.S. business. Then, of course, there are those celebrated Wall Street Christmas bonuses —even though many brokers are cutting back a bit. At Merrill Lynch, biggest of all, employees with more than 20 years' service, who collected an ex tra 23 weeks' salary last Christmas, will get only 22 weeks extra this year. Five-to ten-year men will get 17 weeks' extra pay, down from 18 weeks last year. But Merrill Lynch, which has led the industry in automation, continues to handle its 1,004,000 customers profitably, and opposes higher commissions. Says President Donald Regan: "The small guy shouldn't bear the burden."