The facts of increased institutional trading on the nation's securities markets are by now well known. On the New York Stock Exchange (NYSE), the six major institutional groups—insurance companies, investment companies, noninsured pension funds, nonprofit institutions, common trusts, and mutual savings banks, now own more than one-fourth of the market value of listed shares compared with less than 16 percent at the end of 1956. But, ownership is merely the tip of the perennial iceberg, since institutional trading of stock has become much more significant than institutional ownership. This fact is pointed up in the recent SEC Study of Institutional Investors. It shows that there has been a relatively slow increase in the share of outstanding stock owned by institutions in all markets, but the institutional share of trading has mushroomed.

I am going to consider three questions. First, what have been the trends in the institutionalization of savings and, as a consequence, in the evolving role of institutions in the equity markets? Second, what have been the effects of these trends on the securities industry, narrowly defined; that is, on the securities broker-dealers. And, third, what have been the effects of these trends on the financial markets and the economy as a whole?

Weeden & Co.'s business is that of making markets. We do it in many different types of securities and we take considerable inventory risk in the process. As market makers we learn to be direct in our dealings. “My market is 62 bid; offered at 62½.” “I can offer 5,000 at 62½ net.” The pace and the pressures of the marketplace tend to make us impatient with those who speak in vague terms, who mask their intentions, or who do not know the facts.