Stock Exchange - Definition - Law Dictionary Home Dictionary Definition stock-exchange

Definition :

Stock Exchange, a society of stockbrokers and dealers (or stockjobbers) for the conduct of the sale or purchase, on behalf of non-members, of Government securities and stocks or shares in public companies. See COMPANY. The members of the 'House' (as it is called) must be re-elected annually and pay a substantial annual subscrip-tion. In the transaction of business they are governed by certain usages, and by rules framed by the Committee of the Stock Exchange which bind their outside employers, if reasonable, but not otherwise, See Beilson v. James, (1882) 9 QBD 546 (CA), in which a custom to disregard Leeman's Act (see LEEMAN'S ACTS) was held unreasonable; Chitty on Contracts; and the works of Melsheimer and Laurence, Brodhurst, and Stutfield. Also, the place where they meet to transact business. See BROKER.

Perhaps the most important of the London Stock Exchange Rules are Rules 66 and 75, by which:-

66. The Stock Exchange does not recognize in its dealings any other parties than its own members; every bargain, therefore, whether for account of the member effecting it, or for account of a principal, must be fulfilled according to the rules, regulations and usages of the Stock Exchange.

75. No member or authorized clerk shall carry on business in the double capacity of broker and dealer.

Stock Exchange means, 'any body of individuals, whether incorporated or not, constituted for the purpose of assisting or controlling the business of buying, selling or dealing in securities, Madhubhai Amathalal Gandhi v. Union of India, AIR 1961 SC 21 (22): (1961) 1 SCR 191.