What is a jobber in the stock market?

Written by christopher faille
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What is a jobber in the stock market?
Stock jobbers are stock exchange intermediaries. (Don Farrall/Photodisc/Getty Images)

A stock jobber is a term associated especially with the London Stock Exchange (LSE) and roughly corresponds to a "market maker," i.e. an intermediary between brokers.

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History

Until 1986, there was a sharp occupational distinction between brokers and jobbers on the LSE. Every stock transaction had to go through a jobber's books, and a member of the LSE had to act in a "single capacity," as a jobber or as a broker but never as both.

Neither commercial banks nor insurance companies were allowed to be members of the exchange in either capacity. So a commercial bank with busines to transact found that it had to pay for the services of both a broker and a jobber.

Defenders of such rules often claimed that the single-capacity rule kept conflicts of interest at bay. But as Ranald Michie, author of a history of the LSE, noted, the underlying fear was that a change in these rules would make it impossible for the brokers to keep their fixed commissions, and this would force many out of business.

Big Bang

The government of Prime Minister Margaret Thatcher pressed for modernisation of the rules of the LSE, which had remained essentially the same over the preceding 150 years. Its Financial Services Act of 1986 led to the "Big Bang" (as it was informally christened by the press) of October 27, 1986, when fixed commissions disappeared, as did the single-capacity rule, and various other restrictions.

These restrictions, as L.C.B. Gower has put it, "had to be removed if the City of London was to maintain and enhance its position as a major financial centre," given the competition from New York and from the continent of Europe.

Identification

One of the many developments in the U.K. stock market since the Big Bang has been the emergence of Ofex, an independent public market listing smaller companies than those found via the LSE.

Ofex went public in 2003, and in an interview with The Independent in April of that year, its chairman, John Jenkins, described himself as coming from a background of "jobbing and market making" where "you have a fraction of a second to make a decision."

Such expressions illustrate the continued use of the term "jobbing," which is employed more informally since the Big Bang, and is no longer thought of as a distinct occupation.

U.S. History

In U.S. history, the phrase "stock jobbers" sometimes appears as a term of abuse used by the Jeffersonians of the early days of the republic against the Hamiltonians.

Caution

John Adams, though a Federalist, cautioned that "the stock jobbers" might "become the praetorian head of the Government, at once its tool and its tyrant, bribed by its largesse and overawing it by clamours and combinations."

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