THE JOBBING SYSTEM OF THE LONDON STOCK EXCHANGE: AN ORAL HISTORY

Interview No. 27: Ken Pitcher

Interviewer: Bernard Attard

Warburg Securities, 1 Finsbury Avenue, London EC3: 12 June 1990

Tape 1 side 1

BA:  Could you first tell me, Ken Pitcher, where and when you were born?

KP:  Born in London 9th December 1942,

BA:  And what were the names of your parents?

KP:  Florence Ada and James Robert.

BA: And what did your father do for a living?

KP:  My father was a cabinet maker.

BA:  So no family connections with the  City?

KP:  None whatsoever.

BA:  Did you know your grandparents?

KP:  I knew my grandparents, yes.

BA:  What had they done?

KP:  During their lives my grandmother worked in a paint factory and my grandfather worked in a rubber company.

BA: Did you have any brothers or sisters?

KP:  I have one sister, who in fact works in the City; she's in the City at the moment with a commodity broker.

BA:  And where were you living as a child?

KP:  As a child I spent most of my childhood in Upper Clapton, which is E5.

BA: And where did your parents send you for your education?

KP:  Local school, which was Daubeney Road School, and then following that, senior school was Palmetter's Grammar School in Bethnel Green, E2.

BA: Would you say your parents had influenced your life in any particular way?

KP: Very difficult to answer that but certainly when I started in the City I had no idea at that stage exactly what I was going to do.  I was waiting for examination results and I thought perhaps I might be a chartered accountant, but in the interim period, I remember coming to an agency, called St Paul's Agency in Copthall Avenue, and they sent me off to a firm called Berger & Gosschalk where I started employment and stayed there for a number of years until we merged.

BA: So while you had been at school you hadn't had any definite ideas about what you'd like to do as a career?

KP:  No definite plans at that stage, no. 

BA: You mentioned that you were doing a few jobs in the City before you actually started with Berger.

KP: No that was the only job.

BA:  So what did you do when you finished school?

KP:  Well I finished school, must have been July time, and didn't do anything for a few weeks, and then as I say came up to the City to an employment agency, and from them sending me to Berger, that's where I started.

BA: What attracted you to the City?  Was it the nearest employment agency?

KP: Not necessarily the nearest, but I must have had some thoughts of going into the City.  Can't really remember why, but I must have had some thoughts. But doing exactly what and what the City was all about was foreign.  I mean it didn't mean very much to me at all.

BA: What would you say the attitude to money had been at home?

KP:  The attitude to money.  In what respect do you mean?

BA:  Well was it a family that was fairly careful with money or ...?

KP:  It was a family that had to be careful with money.

BA:  So can you remember roughly the date it was when you did start with Berger?

KP:  I started on 24th of August 1959. 

BA:  And what were the first jobs that they had you doing?

KP:  The obvious ones.  I mean the cliche you always hear, the tea boy.  But literally one had to make the tea, man the switchboard and run stock around the offices in the City.  When I say run stock around the offices in the City, that was delivering bearer bonds and transfers down to the centralised stock payment department.  But it really was at the bottom, as such.

BA: What kind of interview had you had for the job?

KP:  Very straightforward, very simple interview that the job  was there for a clerk, and I took it.  And then things fortunately developed from then on.

BA:  Who actually would have interviewed you? Would it  have been one of the partners?

KP:  It would have been the General Manager. It was an office job rather than a job on the Stock Exchange floor.

BA:  How would you describe the firm when you joined?  Was it a big firm?

KP:  It was a medium-sized firm trading primarily in mining stocks. They were very very good in copper shares, gold mines etc. 

BA: Were they South African stocks?  Rhodesian stocks?

KP:  South African and Rhodesian. 

BA:  Were they an old firm?

KP:  I think when I joined them they were probably about 30 years, 35 years at that time.

BA:  Do you have any recollection of what the offices were like?

KP:  We started in Warnford Court, which is in Throgmorton Street. They were very small offices and as jobbers in those days we didn't have clients so obviously overheads were kept to a minimum.

BA:  And how long did they have you doing the office jobs?

KP:  They had me doing the office jobs for approximately a year.  About a year, 15 months.

BA:  And what did you progress to after that?

KP:  Then I got the opportunity to go onto the Stock Exchange floor to represent the firm there, and I was what was known as a blue button.

BA: And what was involved in being a blue button?

KP:  The job then was to book bargains, keep positions up to date, running bulls or bears in all the different stocks and to go and bid and offer stocks to brokers at...  We had stands in the old Stock Exchange floor, what we used to call a stand where a Waiter stood and you'd go to a waiter and ask for a name of a gentleman with a certain firm and he'd shout out this gent's name. And you'd either bid him some stock, or offer him some stock, because he'd given us what we used to call a limit, indicating that if the share got to a certain price he'd like to sell it or buy it.

BA:  Do you have any early recollections of going into the Stock Exchange as a blue button?

KP:  Only the  first recollection I remember having was going to this enormous place where there  were lots and lots of people running around making lots of noise, and just feeling totally and completely lost.  And we weren't allowed to sit down, and I can remember at the end of the first couple of days, back, legs,  everything ached enormously. But after a period of time that looked after itself.

BA:  By this stage presumably you knew what a jobbing  firm did and you knew what the Stock Exchange did? 

KP:  Beginning to understand what the Stock Exchange did, but obviously knew what the jobbing business was on the basis that, coming up through the office and seeing the settlement side and bits and pieces, one grasped that we were principals and we made our living from making two-way prices buying and selling shares.

BA:  How did you feel about having gone into a Stock Exchange firm? Were you quite happy with that kind of career?

KP: I think once one got onto the Stock Exchange floor, 'yes' was the answer.  It was exciting, very exciting.

BA:  How would you describe the particular part of the Stock Exchange where Berger & Gosschalk had their pitch? Were there many jobbers in that particular market?

KP:  We had a few pitches on the trading floor. One of our main pitches - or two or three of our main pitches - were under a dome, a high dome, and it was pretty spacious, that part of the market.  And there were quite a few jobbing firms dealing in mining shares standing in that area.

BA: Was it quite a competitive market?

KP: Rhodesians and Kaffirs? Very much so. But in 1961 we started in the property share market from scratch and I joined that pitch as a blue button, and have been associated with property shares ever since.

BA:  Were you standing with any particular partner or group of partners?

KP:  Yes I used to stand there with the senior partner and another senior partner. There were three partners in all; three partners and myself, a dealer - so three partners, a dealer, myself and another blue button.

BA:  Do you have any recollections of the senior partners at that time?

KP: Oh yes, very much.

BA:  Could you perhaps elaborate on that a little bit?

KP: The senior partner then was Edmund Berger; another partner named Ian MacLay, and after a period of time the pitch was joined by a partner named Anthony Franklin, and Ian MacLay moved into a different market; and we were later joined by another partner, Ken Ling.

BA:  How would you describe them as jobbers?

KP:  Very good, extremely good.  We probably had a reputation in the early days for being known as bear jobbers.  It has been joked about that most bear jobbers were bear jobbers because they couldn't afford to be bull jobbers.  But we probably as a firm, more than most, would take opportunities on the bear tack.

BA: And how would you describe the firm itself?  Was it a family firm?

KP:  Edmund Berger's father, Julian Berger actually started the firm, if I can remember.  His partner then was Jack Gosschalk.

BA:  And was it still a family firm in the sense that a lot of people related to the original founding partners were employed....

KP:  No, not necessarily, no.

BA: What was its attitude to the future.  You had firms like Durlacher and Akroyd beginning to expand and build their capital base.

KP:  We'd done a similar thing because we'd merged with two firms.  One was an oil specialist firm, Ricardo Isaacs & Bray, and we also merged with a firm specialising in paper shares, Page & Blomfield.

BA: This happened while you were still in the office or while you were a blue button?

KP: This happened while I was on the trading floor.

BA: So the senior partners themselves were taking a fairly positive view on the future?

KP:  Absolutely.

BA:  Did you get that feeling, being a part of the firm, that it was a firm that was expanding?

KP:  Oh very much so, and we'd had a few successful years and we were expanding.

BA: Were there any particular markets that you were trading in that were providing you with the main source of your profits?

KP:  We'd always had good income from mining shares. But the property share market to become quite valuable to us.  We made profits from textile shares when t here were then a hell of a lot of textile companies, unlike there are now.  We were profitable in most areas.

BA:  What was the next step for you? You'd become a blue button.  

KP:  The next step is to become authorised. And to be authorised if I can remember I think you had to do a minimum of two years blue buttoning, and round about two years or perhaps a wee bit more I was authorised in January '64. 

BA:  How did you feel about that?  Was it something you were happy about?

KP:  Oh yes, it was very exciting, terribly exciting.

BA: Can you elaborate a little?

KP:  On the basis that unlike being a blue button you actually stood virtually in the same position during the day, and your job was to make prices.

BA: Did you feel ready to do that?

KP:  By then, yes, because you watch, listen.  And I had some very good teachers, extremely good teachers - very very fortunate. Being that sort of age, you really can't wait to get at it, exactly what you can do or can't do.

BA:  Who were the people that did influence you as a jobber?

KP:  Within the firm it would have been the senior partner Edmund Berger and another senior partner, Anthony Franklin, and Ken Ling would have been the main influences.

BA:  In what ways did they influence you?  What do you think were the qualities that they passed on to you?

KP:  The main qualities was to be polite, because the brokers were our customers; to be aware; probably keep pretty steady under extreme conditions; and under those extreme conditions, look for that to be an opportunity to make a bit of money, in fact; and discipline.  Discipline yourselves inasmuch as we had limits on the size of books that we should be running and it really was disciplining yourself to those sizes of positions.  And I think the other very important thing was not necessarily the bargains that you did, was to learn the bargains that you didn't want to do, which was just as important as the ones you did do.

BA:  Do any examples of that come to mind?

KP: When I say, bargains you don't want to do it - to a degree I think probably market makers have a certain amount of gut feeling and if a broker wanted to buy a large amount of shares, and the gut feeling was such that it felt wrong, you didn't do it.  Now and again, there  probably would have been bargains you should have done. But generally speaking you relied on your judgement and it paid off.

BA: How did you avoid doing the broker's business?  Presumably you had to quote the two-way price to him?

KP: You had to quote the two-way price,  but you'd sense what the price was with the opposition. Although you didn't know, you'd sense what he was making. Although he may have been jumping around with his board and putting red up when  he was  really calling a price up, but you'd get the feeling of perhaps the other market makers' positions or books.  You yourself might have a price on the screen, but when the broker asked you you could make a higher price.  It didn't have to be the price that was up on the board. You could make what you wanted to when a broker came to you.  So in a way, I think probably the word for it, we used to call it "shooting".   You'd be asked this price and if you just thought the guy was going to be a buyer and you didn't want to sell, you would just lift the price.

BA:  Was all this a standard part of one's jobbing techniques, to use the prices on one's board?

KP:  There was a certain amount of spoof played on the boards, absolutely.  If you had sold a reasonable amount of stock and you sensed that the other competing jobbers were looking at the board and wandering on the pitch and wandering off the pitch, you might then use your board to try and spoof the price lower and not give away the fact that you had sold them, but give the impression that you'd bought them.

BA: Was there any way of knowing what prices your opposition were quoting, other than looking at their boards?  Did brokers occasionally...?

KP: Brokers weren't allowed to tell you, really, what another market maker, another jobber, was making. We used to have countrymen in those days, and they had lists. And certainly in stocks where there was quite a lot of shunting between London and the country, they would keep their lists updated with the other jobbing firms.  It was a practice that was accepted. But outside that, brokers weren't really allowed to disclose another's quotation, although he did have to let you know if there was a backwardation before he dealt.  A backwardation was when one jobber was bidding more than you were offering. That would be a backwardation and he'd have to disclose it as a backwardation.

BA:  Was that generally a rule that people adhered to?

KP: Oh absolutely.  If it was found out that the guy had dealt on a backwardation without telling, there was a price to pay.

BA:  When you say 'countrymen', do you mean brokers dealing with country exchanges?

KP:  Yes, brokers, shunting between London, Manchester, Liverpool. Certainly in textile shares there was quite a lot of business up in Manchester, Leeds where the textile companies were based.

BA:  And did the shunting continue right through the Stock Exchange.

KP:  Shunting continued for quite a few years, yes, but it began to peter out towards Big Bang really.

BA: Did you have much contact with brokers doing arbitrage business.

KP:  Yes,  we had what was then known as arbitrage. I'm not quite sure how you define arbitrage now.  But arbitrage then, certainly in international stocks such as Rhodesian stocks, there would be a market in Rhodesia and a market in London, and brokers would arbitrage between the two centres. And if they could sell the stock well in Rhodesia, they would buy it, if they could; but normally they could buy it cheaper from London. And communications then weren't anyway near as they are now. I think ticker tapes used to fly backwards and forwards.  But now you press a button, you know exactly who was making what throughout the world. But that was a form of  arbitrage.  The other form of arbitrage that jobbers would take part in themselves would be on takeover bids, where most of them were share exchanges, and there were - which still exist now - situations where a jobber would sell the company that's doing the bidding and buy the company that was being bid for, when the company that was being bid for shares on the Stock Exchange would make them cheaper than what the bid was worth. So when the deal finally went through, the two share prices would come together. So that was a form of arbitrage that the jobbers did the and still do now as market makers.

BA:  Was there ever a potential for a jobber to get caught out in the sense that he would be short of a stock involved in a takeover situation and find that the stock that he's been short of has suddenly been going up?

KP:  That would happen, absolutely. I'm not 100% sure, but I think one jobbing firm may have ceased trading for that very reason, that they were bears of stock that was bid for and cost them a lot of money.

BA:  Did you, even though you were in the property market, know much about the other side of the firm's business, in the sense of the mining business?

KP:  Yes, we used to.  There was mining. It went further on. There was mining, textiles, oil, papers, hire purchase, insurance. But as dealers we would meet in the mornings in the coffee shop and just chat to one another. Say what was going on.  And that would also happen in the Stock Exchange floor, we'd meet, or we might meet at lunch or whatever, and just chat about what was going on in our various sectors.

BA:  Did the markets have very distinctive characteristics?  For example was the - take the Rhodesian market - very different to the property market you were involved in?  For example did you have open bidding or open offering of stock?

KP:  I can't ever remember open bidding ever taking place in the property share market, but it certainly used to take place in the Rhodesian, South African market, where a jobber would stand up bidding a stock up or offering it down for that matter.  We had a caricature of our then senior partner's father standing in the market bidding 3/8th for Rio.  We had that on the wall in the office in the partner's room.  That was obviously a characteristic, because he was known as somebody that would openly a new bid or offer on the Stock Exchange floor.

BA:  I believe the shops were very important in the different mining markets?

KP:  The brokers to the companies?  I think probably they may be, but mining shares, although I knew a bit about it, weren't really the speciality as such, not spending a great deal of time on that pitch.

BA:  The final thing I want to ask you on that side is, did Berger have agents in, say, the New York Exchange, or...?

KP:  Not then. We used to do most of our business in Rhodesia. I think it was done through Standard & Chartered, it may have been Standard & Chartered in Hollard Street, I think it was in Hollard Street, in Jo'burg.  I can't really remember.

BA:  Do you remember your partners ever going out to Rhodesia or South Africa?

KP:  Yes, the partners would occasionally go out and see the copper mines. In those days there were companies called Bancroft, Riccana, RST, Ntanga. And they would go out to visit the copper mines. But I think they'd probably go once, it wouldn't have been a regular visit.

BA:  By the same token, did the dealers or the partners who were involved in domestic equities, did they ever have contact with the companies in whose stocks they were dealing?

KP:  Not a great deal, no.  They would use the more senior people or the senior broking friends with broking firms to [the company].  That's where the business was done.  In those early days to have had a lot of communication with companies - some firms did - but I think we would probably have taken the view that too much communication may have antagonised stock brokers, which were our livelihood.

BA: It's been said that before the brokers began to set up their own research departments that the jobbers used to be the people who they went to for information.  Do you think there was any truth in that?

KP:  We used to keep fly sheets to each stock that we dealt and on the fly sheet it would give dividend dates, it would give ex-dividend dates, it would have a brief summary of what the company did; and brokers dealers would wander up to the jobber and you literally told them what the company did, when the dividends were due and goodness knows what.  But it was information that we kept ourselves, and not just doing it for a service to the brokers. We found it terribly important ourselves.

BA: In what sense?

KP:  In that we actually knew that a dividend was going to be due in a couple of weeks' time, rather than finding out it was tomorrow. So if you thought you ought to do something, or get a book position because you thought the figures might have been good, or you thought the figures may not be so good, or whatever, you were always aware when these dividends were due to be declared, or figures [were due to be declared].

BA:  Did you feel it was important to have information about the companies at your fingertips? Did it help you as a trader?

KP:  It helped to be aware of dates when things were going to happen.  I think that was probably more than... It was very difficult for us to understand in those days what a PE was and goodness knows what. But if we knew we were coming up to a dividend period, it may have been the pattern of the share or two or three shares during the run up to the dividend was: the price normally went better until the day of the dividend and the figures; then after the figures were out, the share price normally came back.  If that was a pattern, then you'd want to be a bull for that run, and then you'd make sure you were out by the time those figures were actually declared.  So there was a lot of importance attached to knowing when these figures were all due.

BA: Let me revert to your career as a dealer?  Were you given your own book when you started as a dealer, or were you with a group of people working on the same book?

KP: I was with a group of people to start with on the same book. Then after a period of time I did get my own book on the property pitch to deal in.  It was probably after a period, perhaps a year to fifteen months, that sort of time.  The way we remunerated ourselves in those days, we had what one would have thought pretty low salaries, but we got percentages of pitches that we worked on.  And I think the advantage to that was the fact that to a degree it was your own money and you did actually try and make sure you made money.  It was a bit of a spur.

BA:  Do you recall any successes or any ...

Tape 1 side 2

BA:  I was asking whether you recalled any early successes or early disasters?

KP:  As I said to you, disasters you try best to forget!  Successes.  When you trade on your own book and you make your first £1,000 in one day it's terribly exciting. It was just a spur to get in the following morning.  It was never a hardship to get out of bed in the morning and come to work. In fact, if you'd had a good trading week, it was a nuisance that it was Friday night and you had Saturday and Sunday off and you couldn't come back until Monday.  It was that sort of excitement. And we used to do lots of bargains in property shares.  We used to do - in some stocks - pages of them, and what we would call jobbing, where we would buy them at a price, sell them for a small profit, and we'd turn that stock over all day long, and at the end of the day probably finish up with virtually nil position if you wished.  And prices when we were £sd, we used to have quotations such as 3d clo-clo which was 3/4d either side of 3d.  And certainly at the end of the day we had to take out our own P & Ls in each stock to see how we had done in the day, although you had a rough idea during the day how much you thought you'd made or lost.  And there were quick ways of calculating your P & Ls.  You used to know that 1,000 3/4d was £3/2/6.  And 1000 3ds were £12/10/-.  That was just in your head and everything was done in penny halfpennies, three-farthings and sixpences. If you were lucky, you may have made a bob on something.

BA: Did you find that you did develop a fairly sharp memory for figures?

KP:  Oh yes, and it was something that was necessary really.  If you didn't, then somebody over the road with the opposition did and that was probably the difference between being successful or unsuccessful.  And it really was to a degree a sharp mind.

BA: Did you feel yourself directly competing with other jobbers?

KP:  Oh yes, very much so and certainly the property share market was very competitive as we were the late entry.  The two jobbing firms that were there when we joined... One was a firm called Denny Brothers and the  other a firm [called] Anketell.  Denny Brothers merged with Pinchin.   It was known as Pinchin Denny. And Anketell merged with Akroyd, strangely enough.  And prior to us merging with Akroyd - Berger & Gosschalk merging with Akroyd - Akroyd had ceased to trade in property shares. But unfortunately they got them back again when we appeared on their doorstep!

BA:  Were there smaller jobbers in the same markets?  

KP:  Certainly in Rhodesian and South African stocks, there were lots of two-man firms, but as time went by they slowly ceased.

BA:  Where did they fit in? Did they compete directly with the bigger jobbers? 

KP:  They would compete directly with the bigger jobbers in the smaller numbers of shares and would go to the bigger jobbers to unwind the positions.  It was always in the big jobber's and the small jobber's interest that they got on well together, because it didn't matter if you were much bigger than somebody else. If he wants to buy something you wanted to sell, or  sell something you wanted to buy, wonderful.  So there were reasonable relationships in those days.

BA: What would happen if the bigger jobber didn't either want to buy or sell?

KP:  Well, he'd try and find another bigger jobber that dealt in that market. Because certainly in the early days that I was on the Stock Exchange floor, there were quite a few firms down there. But I would assume if he couldn't, he'd just have to sit the position, or he'd perhaps go to a stockbroker and the stockbroker might be able to help him out a bit.

BA: Now how long were you a dealer? When did you become a member of the Stock Exchange?

KP: In January 66.

BA: And what did membership entail?

KP:  Membership entitled you to use the members' lavatories. That was one.  And equally it was a status. The fact that you were a member of the Stock Exchange.  Sort of a warm feeling. More progression really. And you couldn't become a partner of a firm unless you were a member.  So if you had any aspirations of becoming a partner you'd have to be a member before that.

BA: Did you find that you were acquiring extra responsibility as a dealer?

KP:  Oh, absolutely, yes.  As time was drifting along, extra responsibility and more opportunity to expand on positions I ran, etc.

BA:  When was it that you were actually asked to become a partner?

KP:  That was in March 69. 

BA:  And how did that come about? Were you invited into a room one day and asked to become a partner?

KP:  Literally, yes; and I had to find £100 to put into the partnership.  I didn't have £100 at that stage and I went to the bank and they loaned me £100.  And that's when I went into the partnership as a very junior partner.

BA: How big was the firm then, not an exact figure, but say comparing it with other Stock Exchange firms?

KP:  We were probably similar size to one of our competitors, Smith Brothers. We were probably of similar size.

BA:  Did you feel there was anything distinctive about Berger at this stage? Did you think it was different from other jobbing firms, or was it fairly typical?

KP: We were in some ways similar, not only in size, to Smith Brothers, but similar in our way of thinking. In fact we were probably more active traders than one or two of our oppositions.

BA:  Were the senior partners still thinking in terms of expanding the business and becoming larger?

KP: At that stage we were still expanding, getting larger insomuch that we were taking on larger deals. And as time drifted on, jobbing as such, which was the art of just buying and selling all day long the same stocks, started to dry up, and there was a necessity to start running what we would call larger positions that probably weren't covered so easily at the end of the day and were carried on to the following day or the day after that or may even be a week after that. But numbers were dwindling and position-taking was becoming more of the art.

BA:  Why do you think that was the case?

KP:  Difficult to remember looking back, but it may well have been that private client business was dwindling; it may well have been that institutions as such were beginning to get in more and more cash and they needed then to be dealing in larger and larger amounts, and to accommodate that I think it automatically became larger positions.

BA: Which, if I understand you rightly, were much more difficult to unwind on a short term basis.

KP:  Quite difficult to unwind, so one would run those positions perhaps slightly longer than we wanted to at that stage. But it was a change in system that was beginning to evolve.

BA:  Would you say then that markets were becoming a little less liquid?

KP:  Less liquid insomuch that it wasn't so easy to go home with square books, but perhaps becoming more liquid in the size of bargain, where considerations of some of the  individual bargains that jobbers were beginning to take on were quite sizeable.

BA: Did you have any feelings about the size of the business brokers were approaching you with?  Was it something that was a concern to you?

KP:  I think it was something we were growing into and if you were fortunate enough to do a few of the larger bargains that actually worked in your favour, then the risks were greater, but so were the rewards and that was the incentive.

BA: Did the firm have enough capital to cover some of these big positions?

KP:  The firm, at a date I can't exactly remember, sold 30% of itself to a consortium of three institutions, one was Chartered Consolidated, one was Samuel Montagu and the other was the Pearl Assurance.  So in doing this obviously some capital was brought into the firm.

BA:  And would you say that was the prime reason?

KP:  That was one of the reasons, actually to get a better capital base.  And the timing of doing it was such that obviously it must have been in our minds at the time to have gone for the capital base at that time, because these bargains were getting larger and we felt it necessary that we should have a bigger capital base.

BA: Were the banks of any use in providing capital?

KP: Always, always.  I never know figures, but if we deposited £10,000 worth of shares at the bank we could probably gear that up with a multiple of something like seven or eight times its value on borrowings from the bank.

BA:  Do you think you could have run the business without any assistance from the Bank?

KP:  I don't know what other source of capital we'd have got, but it was certainly necessary.

BA: Now, what did becoming a partner involve in terms of your responsibilities in the firm.  Did they change in any way?

KP: Well as time went on, probably nearer 70, 71, that's the timescale, I may have then been in charge of the book on a day-to-day basis.

BA: And what did that mean?

KP:  That meant that I was responsible for the pitch, the people that worked on the pitch, the individuals, our positions, and simply really making money out of the book. It was down to me in fact.

BA:  What would a typical day have been like for you at this time?  For example, where were you living?

KP: From 65 to 71, I was living in Enfield and from 71, August 71, I moved to where I live now, which is a village called Bengeo about a mile north of Hertford Town.

BA: And were you married?

KP:  Yes, when we moved to Enfield and Bengeo. 

BA: So what time of day would you be setting out for the office?

KP:  I'd try and get into the office round about, certainly from 71 onwards, at about 8.30 quarter to nine, and if we didn't meet in the office, we'd have met at the coffee shop and chatted about the day ahead and what we thought the market was doing, where it was going, generally swapping ideas and thoughts.

BA:  Then what would happen?

KP:  Then we'd walk onto the Stock Exchange floor.  We were allowed on, I think, at quarter past nine, although the times did change as - not change a great deal but they did change.  Through most of the period it would have been 9.15 onto the stock Exchange floor where we put our prices up on the board and the stockbrokers were allowed in at 9.30.

BA:  Did you find that during the trading day there were periods that you were busier than others? Was there a kind of rhythm in the thing?

KP: First thing in the mornings you'd be busy, lunch periods quiet, and then probably a flurry towards late afternoon and the close.

BA:  What would you do for lunch?

KP:  Lunch?  Early days we would go to the ABC which, I think, was the Aerated Bread Company, which was in the basement of Warnford Court, where we could get a meal pudding, coffee for one luncheon voucher to the value of 15p.  But then as time went by and the firm expanded we got our own dining room on the top floor in Warnford Court and we occasionally dined there with guests, guests being primarily stockbrokers.

BA: Were there particular broking firms that did a lot of business with Berger?

KP:  Certainly in property shares, we were very fortunate [in] that, if there's such a thing, we became what's known as the market in property shares.  And in the early days one of the main brokers that we dealt with was Reed Hurst Brown, which became Rowe Pitman. And another firm that started broking property shares about the same time we started jobbing in property shares was Quilter Goodison, and in those early days it was Sir Nicholas Goodison that did or started the business. Mind you they weren't Quilter Goodison then, I think they were H E Goodison, when we first looked at property shares. But we built up an extremely good business with him too.  And as we became what under the terminology was called 'the market', we would deal with most stock brokers on the basis that if they had large orders to do then they thought that perhaps we were placed so that they may land on [us]. But in the very early days, we had quite fierce competition between ourselves, Denny Brothers and Anketell, as we attempted to get into the market as such. As time went by, I think it's fair to say, fortunately we became the market in them, so we would see most stockbrokers.

BA: Was there a temptation then to make slightly - I was going to say uncompetitive prices - but that's probably not the right word; but not having somebody that's competing against you fairly directly, did that mean that you were slightly more relaxed?

KP:  If you were in a market on your own, with just yourself and a smaller jobber, then you probably did have things reasonably [quiet]. But one would assume that that would have been not a particularly active market. If it was an active market, then other jobbers would join in. If they thought you were sitting there all on your own and you had it to yourself, then somebody would join the party.

BA: What was the feeling about jobbers moving into different sectors?  For example, some people have said to me that it wasn't regarded as the done thing.

KP: Not particularly easy.  But if you were determined enough you could actually start up a market or go into a market and just take the complaints that  went with it, but soldier on, really.

BA:  Just to revert to this typical day for a few moments.  You'd leave the Stock Exchange at about 3.30 when it closed, would you?

KP: 3.30 it closed.  We'd go back to the office which was the opposite side of the road in Warnford Court,  where we'd stay. We'd take our books out, P & Ls, profits and losses; we'd put them in a general book, where all the different markets put in their profits and losses; and we could see how much we'd made or lost on the day. And at the same time, there was always business after hours on the telephones. And we'd probably leave around half past five, quarter to six.  When we were extremely busy, certainly in the very early days when I was a blue button, we were extremely busy and we were doing loads of bargains in property shares, to keep books and everything up to date, you'd sometimes sit there till nine or ten o'clock at night, just to make sure that they were absolutely correct for the following morning.  Because if they weren't correct, it would take weeks and weeks of work at a later date, sorting it out.  Plus the fact that the boss at the time wouldn't be very pleased either.  So you sat there until you got it right.

BA:  What would you do in the way of holidays?

KP:  Holidays?  Yes, we'd have the summer holiday, with children.  From bucket and spade in England or Wales or Scotland or wherever, we took the eldest - the eldest child - then for a first trip abroad.  We probably, up until the ages where they no longer wished to come with us, took them abroad once a year during August time.

BA: Were there particular times of the year when it simply wouldn't have been reasonable to consider going away on a holiday?

KP:  Certainly, if we were busy, then holidays have been known to have been put off.  It's like every business, if it's there, you want it; if it's not there fine, you feel a wee bit more relaxed to go away. But if you're actively trading, it's an active period, people have been known to put off holidays.

BA: The early seventies was a period when first there was an enormous boom in property, and then you had the crash.

KP:  We had the crash in '73/4.

BA:  How did these events affect Berger?

KP:  Certainly during the boom period; early '70, '71, '72, were very profitable years; and the market peaked out, if I can remember, on November 13th, I think, and interest rates went to 13%.  We had a pretty sizeable bull book on that day, and once these rates hit 13%, we changed... If I can remember rightly, I was saying to the guys, 'You're going to have to put the market down 5% and sell it, just sell our bull positions out, and if we haven't cleared our bull positions after 5% put the market down another 5% until we do clear it.'  At the end of the day we'd gone from quite a big bull position to quite a big bear position.  We'd turned totally. And there was a small rally I think the following day after that. Then the market started to come down, and we maintained our bear positions throughout the period.  So in fact - again touch wood - we were pretty fortunate, that we did run the bear positions through the [period], which was a horrible bear market.  Some of the leading companies that are on the screens now got down to quite ridiculous prices.  I think British Lands, which was a super company actually, got down to 5 pence - no big figure - from prices perhaps in the mid £2.50s.  They just came right the way back.  And as you know it then started to bring secondary banks down, the property market then brought secondary banking down and some wonderful companies that are up there now were rumoured as being insolvent.  But fortunately most scraped straight through.  But that really was a bear market, and I think the index got down to 150, 160 - the industrial index.  Anyway at the end of that period, we'd actually made quite a lot of money on the bear tack in property shares.  For some reason rumours abounded in the Stock Exchange that we were in all sorts of trouble as a firm because we'd lost an enormous amount of money in property shares, when in fact it was the opposite that was true, we actually made quite a lot of money. And it was during '74 that, it may have been the result of some of these rumours, the partnership as it was, the senior partners, the partnership of the firm - we didn't have a partnership, we had directors then, because we'd formed a limited company; so we had a few directors and we were either known as managers, or shareholders or something; we were in the members book, but I can't remember exactly what it was - anyway the directors of the company decided to cease trading and liquidate the firm, which they did, and most of us went to Akroyd and Smithers and reappeared on their doorstep again with a property book, in which they'd ceased to trade some time earlier!

BA:  Why do you think the senior directors of the firm decided to liquidate?

KP:  Difficult one.  Being a partnership, most of the cash in the firm was theirs and it was a decision that they, between them, had come to.  I don't actually remember why they came to that decision. It may have been that the index was at such a low level. Difficult to know.  But it was a voluntary liquidation.  Prior to liquidation we had in fact aborted merger talks with Akroyd and we had had aborted merger talks with Bisgood Bishop.  But both the negotiations fell through with both those firms and a decision was taken finally to liquidate the company.

BA: Had you had any say in that decision?

KP:  To a degree, but not as a director of the company.  I remember giving my views, but that's where the decision lay at the end of the day, with the directors of the company.

BA:  How do you characterise the firm just before it liquidated?  Would you still put it in the same kind of category as Smiths?

KP:  We were probably still very similar to Smiths.

BA:  So would you say it was a medium-sized firm?

KP:  We were medium-sized I think, yes.

BA: What was the feeling in the Stock Exchange to a firm like Berger liquidating?  Because in the previous year you had a big gilts firm, Francis & Praed, going out and some of the smaller firms also liquidating, and there was this reduction in the number of jobbing firms.

KP: It was a firm with [such] an enormously good reputation, that I think a lot of people were probably disappointed that the firm as such was leaving the Stock Exchange. But fortunately most of us stayed together, and moved on to Akroyd & Smithers, where, from the day we joined, we were given a reasonable amount of leeway to continue our business the way we had run it in the past; and, as I say, fortunately for all concerned it worked out reasonably successfully.

BA: How would you contrast Akroyd with Berger as a firm?  I suppose they were both companies?

KP:  Well Akroyd basically were a gilt-edged firm with a good equity business, but primarily a gilt-edged firm that obviously wanted more coverage in the equity market.  

BA: Did they have a different style of jobbing?  A different attitude to jobbing?

KP: Probably not as active as traders as we were.  As I said, we were probably very similar to Smith and we would trade and trade and trade where they would probably be not so active in turning stocks and shares over.  But then equally, similar to ourselves, where we differed slightly to Smith, we probably...

Tape 2 side 1

KP (contd):  was the fact that we probably had got used to running positions in, certainly, certain markets, and I think it was something that was receptive to a degree at Akroyd & Smithers.

BA: Was there a particular skill in running positions that was different to what you would call jobbing proper, turning over your book fairly rapidly?

KP:  Yes, getting them right, that was the main skill! But just sitting there that wee bit longer than perhaps one might have otherwise done, and perhaps selling that little extra bit of stock, when you're short; and perhaps buying a little extra bit of stock when you were a bull; and just waiting for - once again - what your gut told you was the right thing and just waiting for the positions hopefully to come right.

BA:  What was the advantage of taking positions as opposed to turning over stock?

KP:  Advantage?  Sometimes called upon us by the customers, by the brokers, that they wanted a price in a large amount.  And they weren't interested in doing part of the amount to leave you the balance to work on.  They actually wanted the price and you'd make the price and do a deal.  Once you'd done that deal you then had a largish position, and to trade that position for a tiny amount of money the risk/reward [ratio] was totally wrong. So if you were going to take on that largish position and you thought that it was a reasonable position to have you might sit with it for a bit and see if you could actually make an extra bit of cash out of it. But if it was a position that something was telling you was wrong, there you'd have to go out there and close it out, cut it; you were going to have to cut it, just go out there and cut the thing if it's a wrong bargain. So I think if you thought on the lines that you ran the good ones and cut the bad ones you're probably in business.

BA:  Did you find you had adequate capital to take on some of these big positions?

KP:  At Akroyd & Smithers?

BA:  At Akroyd, yes.

KP:  That was never a problem, never a problem.

BA:  Did you feel in some ways that the gilt side ...

KP:  The company was just going public, in '75 I think. It was just going public anyway.  We never never did a big deal because we couldn't find the money to do it.

BA:  I was going to ask, did you think, coming from a pure equity jobber that Akroyds was in a position where they could subsidise the equities from the gilts and then vice versa - they could shift resources around the firm?

KP:  That was probably one of the thoughts, with Akroyd then, of expanding the equity base.  Gilts were big market, big big market, big business and the firm had fought its way into a good position in terms of size and profitability, that to expand the equity base was [thought] probably a good thing for a rainy day.  Our firm, well the boys from Berger & Gosschalk joining Akroyd, fulfilled that role of expanding their business.  We took a few markets to them. They didn't trade oils, papers. So there were quite a few markets that we took to Akroyd that they didn't actually deal in.

BA:  Again, reverting to the larger size in which you were dealing and position-taking, did you find that, particularly because there were fewer jobbers in your particular markets, that in fact you felt a kind of obligation to deal and a little bit of pressure on you in that respect.

KP:  A bit of pressure, a bit of obligation; but at the same time you try and gauge the spread which you'd take that deal on for commercial reasons. But I think there was a certain feeling that one was soldiering on to a certain degree.

BA: Did you ever think that jobbing itself may have been ceasing to be a viable way of organising business in the stock market? In other words did you feel that there was pressure on single capacity?

KP:  There was pressure on single capacity.  It certainly came about when we were going to be investigated by the Office of Fair Trade.  One followed the other. Stock brokers had fixed commissions. If those commissions were to become competitive, stockbrokers would need extra income, so any business that they had they would want to cross, or put-through, to boost their own incomes, and that would diminish the profitability of the jobber, and hence, probably the basis for Big Bang and dual capacity.

BA:  Did you find you were doing many put-throughs?

KP:  Quite a few put-throughs going on. But the rules were such that at the time of dealing we had the opportunity to say whether we wanted to do one side of the business, part of the business. In fact before a broker could actually put the stock through the jobber, when he had the one side of the deal, he had to approach the jobber to get those put-through terms. But it might be at that stage, when they are discussing the put-through terms, that the jobber may desperately have wanted the stock and would bid for it and it would have  been sold to the jobber without the stock being put-through.  But  nevertheless, if a put-through was taking place, the jobber did have the opportunity to say, well he'd like x number of shares to cover a bear position.  But I think having the OFT position probably was the beginnings of dual capacity on the basis that both sides would lose income, and that would be that.

BA:  It's said that during the seventies a market in stocks and shares began to develop outside the Stock Exchange. Did you feel, for example, in the stocks in which you were trading, that institutions were dealing directly with each other?

KP:  We heard a lot, whether it was hearsay or fact. One  did hear that stock was changing hands between the institutions outside and there probably was some foundation to it, but I can't really think it affected us greatly in the property share market. I can't remember when it was actually set up, but I do believe we had a system called Ariel that came on-stream, which was a matching system between customers, but I don't think that really caught on.

BA:  By the same token, did you ever worry that some of the clients who perhaps would have been coming to the Stock Exchange otherwise were going to outside brokers or outside, say American banks, to trade?

KP:  I think we felt really that American banks were probably getting involved.  The market probably was just beginning to become a wee bit fragmented. Is it Fleming today? They started a market-making business outside the jobbing system on the Stock Exchange floor a few years prior to Big Bang.  I think that was recorded in the press this morning. But the system was becoming fragmented.

BA: Were brokers still using you as a source of information?

KP:  Yes, they'd still ask us.  Because we didn't have turnover figures in stocks as they are now, and the brokers would ask if there's much going on, is there a reasonable market in the shares. The sort of everyday chit-chat really.  Asking what the rumours are and what's going on in this stock.  That chat was, always there up until we came off the floor really.

BA:  Were your contacts with people outside of the Stock Exchange any different to the earlier part of your career?  For example, did you have any contact with the outside investing public, either institutions ...

KP:  Oh we'd get to know some of the dealers, certainly the dealers with the clients, by being invited to brokers' lunches where they'd have a client there, or Christmas cocktail parties where the brokers would invite quite a few of their clients - mainly dealers from merchant banks - and jobbers; so we got to chat and we used to have disagreements on what they thought we were, and then again how tough they were.

BA:  Could you elaborate on that a little bit?

KP:  The easy guy to blame at the end of the day was the jobber.  If a broker took an order and in simple terms messed it up, it was very easy to go back and say it was the jobber's fault: 'the jobber was off, when I got back the jobber didn't want to price any longer'.  So it was the jobber. But as time went by and I guess we saw more of these people - clients - and the more they got to know us, then I think we slowly began to help ourselves a wee bit.  But it was always the simplest thing on earth to say it was the jobbers' fault and let the broker's dealer off the hook.

BA:  It's been said that some of the institutional investors wouldn't play fair in the sense that they would break a large order into smaller chunks and send different brokers into the market with the same bit of a large order.  Did that happen terribly much in your experience?

KP:  It did used to take place and I think we went through a bad patch, the jobbing system, from large orders being given to three or four different clients at the same time.  And it really was a matter of talking to the brokers themselves, 'Look this has got to stop, and you've got to say to whoever this client is, "for goodness sake stop it", because you're not doing us much good and you're probably not doing yourself much good at the end of the day.' But under those circumstance it was really a matter of standing up for yourself.

BA:  Roughly when did you go through this patch, was it sort of mid-seventies, late seventies?

KP:  Difficult to remember. It may have been mid-seventies, late seventies, but I can't really remember.

BA:  Any ideas about why that happened?  Did you have a lot of new fund managers coming in who really didn't know much about etiquette?

KP:  It may have again have been, as you say, new fund managers coming in and a different approach on how things should be done.  But I think to a degree most jobbing firms did their best to stop it, sit on it; although towards the latter part of trading on the floor before Big Bang, probably for nine months, it was a bit of a free-for-all; and I think a free-for-all on the basis that the brokers weren't quite sure, after Big Bang, where their income was coming from. So with nine months left, to a certain degree quite a lot of the etiquette vanished and even your chums were going round dealing with other market makers.  That part of the etiquette was vanishing pretty quickly, when we as jobbers were making prices to brokers, that we were making prices to leave an order and those orders were still being taken elsewhere and executed.  And that certainly was even being conducted by one's chums to the extent where he'd say to you, 'Well if I don't do it, somebody else will.' So we did have a very difficult period on the floor.

BA:  Just to revert a little bit to the period shortly before, one thing the jobbers were criticised a lot for were spread agreements, something I believe brokers didn't like.

KP:  There were spread agreements in certain areas, not in all, but in certain areas there were spread agreements. But there again, if a broker approached a jobber and wanted to execute an order inside that spread I don't think that was a great problem.  The opening gambit may have been similar in width to the opposition, but the actual price at which the deal took place could have been most of the time inside that quote, or if it was a large bargain inside the quotation.

BA:  Now, you mentioned earlier that you joined Akroyd in 1974, how did your career unfold with the company?

KP:  After I'd been here for two or three years I was made a director of Akroyd and Smithers.  I think I was one of seven directors the company had.  When Big Bang took place I became a director of S G Warburg Securities and at this present moment in time I'm still a director of S G Warburg Securities and joint Chairman of the UK Equities Division.

BA: Had you continued jobbing on the floor of the Stock Exchange right up to Big Bang?

KP:  Yes I had.  We spent many evenings working with our partners on how we would conduct our business after Big Bang.  We wrote business plans etc.  But during the day most of the time was spent still trading on the Stock Exchange floor.

BA:  Did you find jobbing itself had changed in any way from when you first started as a dealer in the early 1960s?

KP:  It changed. The biggest change of all was the greater risk taken towards the latter part, before Big Bang, than in the early days when we started, where, I said earlier, we could actually leave that evening level in stocks, with an even position - certainly something we couldn't achieve towards Big Bang.

BA:  Did you feel that jobbing was still a competitive business?

KP:  Oh yes it was still competitive. Everybody to a degree wants - it's in their make-up generally - to be up the front there, and to be what's considered the 'market', to see the 'market', certainly as a jobber. It meant you saw more order flow than the opposition, and seeing more order flow to a degree helped you decide which way you thought that particular stock's next move was because you were fortunate enough to see whether there was an imbalance of selling to buying, and obviously that would help you determine which way the share would move next.

BA:  Did you ever feel that there would have been more value if there had been more jobbers in the Stock Exchange? I suppose in one sense it wouldn't have been of value in the sense that it would have been taking business away from you.

KP:  Absolutely.

BA:  But what I meant was, do you think as a system of doing business it would have benefited a bit more? That markets may have been a bit more liquid?

KP:  I think we've seen that from the jobbing system to now the market making system, where a great number of jobbers came down to a smaller number of jobbers but were bigger units that had the capital base to make prices in large amounts. Now we're coming to a new dealing system with market makers, we have a lot of market-makers.  But recently as one's seen, numbers are slowly coming down. Whether there's sufficient business to go round to look after twenty market makers or integrated firms, or whether it should be a smaller number? - I think that's mentioned in the Daily Telegraph this morning.  Certainly the jobbing system  - when we were down to five jobbers there was a reasonable amount of liquidity and I think to have had ten may not necessarily have made the market any more liquid. In fact it could have had the opposite effect.

BA:  And how would that have come about, the market being less liquid?

KP:  Again, what one's experience had been in the past, jobbing, is that you do need to see order flow, and if the order flow is spread among too many players, it can actually have in some way an effect on the liquidity given by each individual firm.  The more orders you do see - trades that you do see - can encourage you into giving more liquidity to that stock or that sector or the whole sectors. But it really is one of order flow.

BA:  When you say 'give more liquidity', do you mean make closer prices or be a lot more prepared to take risks or to take positions?

KP:  I think probably more prepared to take risks with positions.  It could affect price widths and price widths could become narrower. But to actually get the best out of a quote-driven system, the market-place needs to be one place and not fragmented, and it needs to see order flow.

BA:  What were your feelings when the Stock Exchange decided to do away with the jobbing system and do away with single capacity?

KP:  I think we were bracing ourselves for it.  It had been mooted by certain people, articles in the newspapers, so it never came as a great shock.  What I think we all wanted to do was - and probably every member of the Stock Exchange - wanted to be on the right side. And we at Akroyd & Smithers knew who we wanted to be with and fortunately it worked out that way.  The thing that we felt we were going to notice, and we did, was probably a lot of the chums that we'd, you [had], relationships we'd built up on the Stock Exchange floor with brokers, to all intents and purposes they were suddenly going to become the opposition, and once we came off floor, although you saw some of those guys occasionally, it never quite works the same way - 'Well, we'll still see one another two or three times a week' - it never really happened.  So a lot of friendships, although we talk on the telephone, a lot of face to face contact and chats and 'how's the family?' and goodness-knows-what - that sort of thing seems to have vanished.

BA:  Did you ever thing under the old system that jobber/broker relationships sometimes may have got a bit too close?

KP:  May have done.  Although you could still have a good relationship, a friendly relationship with a broker, 9.30 to 3.30 was something totally different, because he had his job to do and clients would have found out if the relationship between two guys was such that he was dealing at his disadvantage.  That's purely on the business side of it; that if it was thought that, in a relationship, prices the guys were dealing at were wrong, the client would soon find out if that was the case.  But having a good relationship with brokers and vice versa acted in some ways the opposite way round, whereby if you did a lot of business with a broker, you were pretty well inclined to give him a good service on a continuing basis.

BA:  Do you think this is the way it worked for most of the jobbing firms, that they did have relationships with particular brokers that were based on fairly long-established trading relationships?

KP:  Yes, I'd have thought so.

BA:  But this didn't make it any less competitive or would an outsider looking at it have said...

KP:  Cosy relationship?  

[BA: Yes]

KP:  Would be justified I think if the relationship was such that prices that deals were taking place at were the wrong prices. But certainly the big customers would soon have felt that was the quotation, what is the touch, because a brokers sometimes would go round the market checking the prices with all three market makers and give the client the touch before he dealt. Other dealers might find the best way that they could deal is... They believed that they knew what the touch was and it was safer just to go to one jobber to get a big order done and just do that trade. Nobody knew that trade had been done, but it had been done. Where by going round the market checking in all places puts fire in three or four jobbers' tummies and prices could start to move before he'd actually ever executed an order. So there was skill from a broker's dealer's point of view, on some deals, to know exactly where he was going and how he was going to execute that order and where he thought he was getting the best deal.  And the professional broker's dealer was pretty good at that, very good in fact in knowing generally whose pitch to appear on, or deal over the telephone. But they got to know through experience, and if they had been given a bad deal by a jobber on more than one occasion they'd tend to steer clear of them.  They'd go where they thought they could get accommodated extremely well.  That was part of the business, and it was part of the [business of the] jobber to give the broker that feeling of comfort, that this was the place to be to do your business.

BA:  Had you stayed on the same pitch more or less throughout your career?

KP:  More or less from 61.

BA:  Did you feel there'd either been any benefits in that or do you think it would have been - were you ever tempted to get involved in other markets?

KP:  I think if it's a pitch that you're on and you're getting what you want out of that pitch, satisfaction and profitability, then in some ways there's no reason why you should move.  Guys do move around from pitches to pitches. It may be that they just don't like the particular market and can't get on with it. Others, younger guys, might be yearning to have a go at that particular market.  But it varies for different reasons. But after all, if a guy is successful and making profits there's not always a necessity to move them. Because they do get to know, certainly under the jobbing system, the principal players: who is doing what, knowledge of how shares react under certain conditions, each individual share that...  It did have a worth.

BA:  Were there brokers who specialised?

KP:  Brokers that specialised in property shares? Rowe Pitman did.  Peter Hardy's here now. He's a specialist in property shares. A number of firms. Quilter, Goodison were specialists in property shares; Panmure Gordon; quite a few that did specialise in them.

BA: Did they have any distinctive characteristics compared to stores or other sectors, in the way they behaved.

KP:  No, not particularly. I think most guys in their sectors would say this sector is more difficult than your sector and vice versa, but you usually find that within sectors to a certain...

Tape 2 side 2

KP: that the leading stocks in those sectors will behave in a similar fashion; that either will all be going up at the same time or coming down at the same time. You do get anomalies on occasions, but generally the quality stocks in sectors do follow one another.

BA: Did you ever find that interest rates were something that would affect you more than other sectors?

KP:  Interest rates we were always vulnerable to interest rates, as a sector, certainly going back to 73-74 where the property companies were extremely highly geared and interest rates were beginning to take their toll. So we certainly from then on became very much an interest rate conscious sector, as we still are now.

BA: Do you recall any situations when you were caught out by a sudden move in rates, or something like the devaluation in 1967?

KP: We certainly were caught out, I think I said earlier, over the rise in interest rates to 13% and, I think I told you, we managed to get out and get a short position. But I think that's the most memorable one I can remember. Now I think it's part of our life, interest rates. Whether the right word's sophisticated, but it does seem to be a far more sophisticated business now than when one first started!

BA:  How would you compare the Stock Exchange as an institution, as a market place, towards the end of your jobbing career to the place when you joined?  I mean you were physically in a different building.  Had the Stock Exchange as market place changed in any way?

KP:  I think a lot of the people in it had probably changed enormously and as time went on by from first joining to Big Bang we probably had seen far more younger people getting into more senior positions really.

BA: Do any particular individuals stand out in your career, either jobbers or brokers?

KP: Lots of them.  People I can remember from outside our own firm but people who helped me enormously over the years - certainly had.  Nicholas Goodison has; Peter Hardy has from Rowe Pitman; Max Guildford who was a partner with Cazenove; Geoffrey Bass who was a partner with Scrimgeour Vickers.  There were quite a few gents in the early days that did help me in fact, that I managed fortunately to get on with.  They were big men. They had big business and I was very lucky.

BA:  It's interesting that you mention people from the broking side. Did any particular jobbers stand out in your recollection, either for their capacity to influence the market....?

KP:  Yes, there was a few.  Certainly one guy with Wedd named Tommy Anderson who would move prices all over the place, and there was another guy with Wedd, known as 'Banger' Bennet, I think he was known as 'Banger' Bennet because every day he came back from lunch he'd bash the life out of the store market, and he was known as 'Banger' Bennett.  But we've been friends with quite a few of the market makers, and some not so friendly with, but there were some characters.  

BA:  You've already said that the risk factor in jobbing had increased in certain respects. What would you say the strengths of the single capacity system had been?

KP:  The one obvious strength was the fact that the jobber - which would vary from day to day - but the most competitive jobber in markets, would actually see the entire order flow.  It would actually be shown to the market place whereas that's not necessarily the case now.   When we were single capacity all the business had to be taken to the jobbers before it could be executed and in that capacity you probably did have what one would class as a central market.  But not necessarily the case now.

BA: Were there any weaknesses in the jobbing system?

KP:  I suppose if you compare the jobbing system then to what it is now, the weakness would have been capital base.  The size of the orders that are transacted now and the competitiveness, I would have thought that capital base would have been a problem.  And if one's noticed last year, not this year, but last year, the results of some of the broker/dealers in the system, I think during the jobbing days if one of these figures had come out it probably would have sunk, not quite the whole place, but getting on towards it.  Things have changed dramatically.

BA: How do you square that with something you said earlier, that you'd never not taken on a position because you hadn't had the capital?

KP:  Because you'd be talking about one position.  That position might have a value which would have been big in those days, of say £20 or £30 million and that would have been a big trade.  Now you're talking of taking on trades to the value of £100, £200, £250 millions.  There is what we now call the bought deal, where you're talking about very large sums of money, which those jobbing firms, as we were, generally speaking set up - a trade of that size going wrong would have been a difficult one.

BA:  What would you say it took to be a good jobber?

KP:  I think the ability to discipline yourself insomuch that as I said earlier you don't want to do every bargain; you want to do the bargains that you think suit you and those that you don't think will be a particularly good bargain, you want to duck.  Discipline in keeping books, positions under some reasonable amount of control, and the risk involved.  Back in the old days I think you had to be alert, you had to be awake, you had to be friendly and have a personality, because you do want to see the brokers on the pitch. And I think a good memory  helped. It didn't do any harm, if you could remember what had happened, and the patterns of shares.  It was just a bit of intelligence. And I suppose the other word is 'clever', in simple terms.  That would be an advantage.  I think it's a mixture of all those things.

BA: How had you felt about your Stock Exchange career?  Would there ever have been times when you would have thought of going off and doing something else?

KP:  No. No because fortunately it's a career that's seen change.  It'sm never been dull really.  And there'll probably be more change from now on in. We're still evolving. We've got 1992 coming up. Goodness knows what. But the stock market never stands still and there's no day the same as yesterday.  They're all different.

BA: I think that's a good note on which we can finish.  Thank you very much.