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(ii)-The enforcement of the Articles of Association when revised.

The Committee of each Exchange ought not to be disproportionate in size to the number of members. It is difficult to see why more than four mem- bers at the outside are required. This Committee should be re-elected yearly and should enforce strictly the Rules of the Exchange. Instead of waiting until definite complaints are formulated the Committee should, if there are persistent rumours that a member of the Exchange is insolvent or has committed a breach of the rules, investigate the rumours. In such cases the member's books should be inspected by the Committee if considered necessary. The Committee should deal severely with all cases where it is satisfied that a member has been over-speculating on his own account, that is, entering into commitments which he cannot finance if he loses. The proceedings of the Committee should be formal and evidenced by proper minutes.

(iii)—Admission of Members.

Committees ought in future to exercise much greater caution in adwitting members. The attitude of the Exchanges in the past, with the exception perhaps of the Hongkong Stock Exchange, appears to have been that anybody could become a member if he could buy a seat and pay his entrance fee and subscription. Little attention appears to have been paid to his real financial position or to his sense of moral responsibility. It might be said that the price of the seat was a guarantee of his finan- cial soundness but in certain cases the money in question has been all that the intending member possessed and in others even that money has been borrowed. Here also the Rules of the London Stock Exchange might with advantage be copied. Under Rule 38 a candidate for mem- bership has to state in writing his personal history and occupation or employment since he came of age.

(iv)-Authorized Clerks.

No member should be allowed to employ an authorized clerk unless the clerk in question has been approved by the Committee. Rules 58 to 72 of the London Stock Exchange ou this subject might with great advantage be adopted by the local Exchanges. There are instances of irresponsible and untrustworthy persons who have been employed by certain brokers and have caused loss both to brokers and clients by reckless dealing.

(v)—Broking as distinct from Jobbing.

In this Colony the same person acts both as broker and as jobber and it does not seem practicable to insist that he shall not exercise both functious as the volume of business is not sufficiently large to enable it to be divided up. It is however imperative in the interests of the public that if a broker is dealing on his own account he should disclose the fact to his client and charge no brokerage. Non-disclosure gives the client a legal right to repudiate the transaction but there are few who know this. The Exchanges ought to have a rule on the subject and see that it is strictly enforced.

A broker ought also to be compelled to disclose whether the transaction is one directly between two principals or through the medium of another broker. (On this subject see Rule 88 (1) of the London Stock Exchange).

(vi)-Internal management of the Exchanges.

The procedure of the Exchanges ought to be regulated by proper rules. The greater number of the Rules of the London Stock Exchange are con- cerned with the internal management of settlements so as to ensure that these will pass sinoothly. None of the local Exchanges has adequate rules on the subject. Almost all their procedure is informal and in the case of disputes there is nothing beyond the mere opinion of the Committee to decide who is right and who is wrong. In particular there are no rules defining what is a Settlement Day, its duration and whether it can be postponed, and no rules as to the working of the very complicated "ticket" system.