How to sell

The procedure when selling is very similar to that of buying. Again your Broker will send you a Contract Note giving all the details of the transaction. This time he will also enclose a Transfer Form for you to sign. This, together with your share certificate, must be returned to him in time for the Settlement Day shown on the Contract Note. Provided this is done, he will then send you a cheque for the proceeds of your sale.

If you are selling only part of your holding, you must still enclose a certificate sufficient to cover the amount being sold. Any balance will be entered on a new certificate, which will be sent back to you in due course.

Unless there has been some stipulation to the contrary, whenever shares change hands, all the rights, privileges, obligations or duties attaching to them change hands as well. Any communications you receive from the company after you have sold your shares should be passed back to your Broker as soon as possible, for him to send to the buyer of your shares.

To protect investors, The Stock Exchange has set up a Compensation Fund to recompense clients who lose money or stock as a result of their Broker defaulting. Payments from this Fund are entirely within the discretion of the Council of The Stock Exchange, who take into account all the circumstances of each case. While it is rare for a claim to be refused, it must be appreciated that compensation is not automatic. A separate brochure sets out the circumstances in which The Stock Exchange will entertain applications for compensation.

The Council do not replace securities which have been misappropriated, compensation always being in money form. In most cases, this will be based on the “Hammer Price”, which is a price calculated according to the Rules of The Stock Exchange and which represents the market value at the time of the Default.

The history of the stock exchange

Dealings in stocks and shares began with the merchant venturers in the 17th century. Gradually an informal market developed around the coffee houses in the City of London. In 1773 “New Jonathan's” Coffee House became the Stock Exchange, though it was not formally constituted until 802, with some 550 subscribers and 100 clerks. Though London was overwhelmingly the largest exchange (until the 1914-18 war it was the world's largest) the growth of the Industrial Revolution prompted the establishment of local share markets in other parts of the country — more than 30 of them at the peak. These markets first began moves towards amalgamation in 1890, when the Council of Associated Stock Exchanges was formed. By 1967 the “Country” Exchanges had grouped themselves into six Regional Exchanges, and in 1973 all seven Exchanges in the British Isles amalgamated to form The Stock Exchange of Great Britain and Ireland, with Member Firms scattered from Aberdeen to the Channel Islands and from Lancaster to Limerick.

Today the Stock Exchange is a market place where securities are bought and sold. These are shares in over 7,000 companies and government stocks which are known as gilt-edged securities. In one year stocks and shares worth over £570 billion change hands.

Most adults in Britain save or invest in one form or another and much of these savings will be channelled through the Stock Exchange. This investment might be direct ― perhaps buying shares in one of the companies which have recently come onto the market, such as TSB, British Gas, Virgin, Rolls Royce and British Airways. The investment might be indirect ― anyone who pays into a pension scheme, has life assurance or subscribes to a trade union is probably investing on the Stock Exchange as this is where a large part of the institutions' funds are invested.

You have probably seen pictures of the Stock Exchange showing a crowded trading floor with throngs of dark suited men milling around hexagonal stands. This indeed was the picture until 27th October, 1986 ― the day commonly known as 'Big Bang' which resulted in the greatest changes in the history of the Stock Exchange.