STRINGENT CONTROL

Evening Post, Volume CXXIV, Issue 60, 8 September 1937, Page 14

STRINGENT CONTROL

MELBOURNE EXCHANGE

Members of the Stock Exchange of Melbourne have adopted new rules which are designed to give increased protection to the investing public. The committee of the Exchange is given the power to have the books'of members audited, and there is a prohibition against excessive trading by a member. Under the power conferred by the members, the committee has introduced regulations dealing with audits. Members are required to keep books and records for the purpose of recording their transactions in a form which will enable an auditor to answer a list of 12 questions. From the answers given to these questions the committee will be able to satisfy itself whether the member's affairs are in order or not. It is expected that the next move by the committee will be to have the books of all members audited. The auditor to nominate his own auditor. The committee is authorised to have a special audit made by its own auditor at any time. Members of the Exchange are now prohibited from effecting transactions in which they are interested directly or indirectly, if the purchases or sales are excessive, in view of the financial resources of the members or the market for the securities involved. On the question of a transaction being "excessive," the decision of the committee is conclusive. A new rule has been adopted dealing with trading by members when this might be adverse to the interests of clients. It places on record one of the previously unwritten laws of the Stock Exchange by providing that a member shall not buy or sell securities for himself while he holds an unexecuted market order of a client to deal in the same securities.