Role of regional security exchanges

The importance of efficient distribution channels for corporate securities has long been recognized. Effective markets for previ ously issued stocks and bonds contribute to the liquidity of such investment media and permit more widely spread ownership than would otherwise be possible. The liquidity associated with securi ties already in existence in turn conditions the availability of exter nal sources of new corporate funds.

Contrary to what might be anticipated, substantial gaps exist in our knowledge of certain segments of the securities market. Recent studies by the Securities Research Unit of the Wharton School, University of Pennsylvania, under the auspices of the Merrill Foun dation, tend to narrow the breach in the strategic area of over the-counter trading, but deficiencies still remain both here and elsewhere. The consequence is that judgments of the over-all per formance of distributive conduits for corporate securities must be based upon incomplete evidence.

This monograph, somewhat similar to the Wharton studies, is designed to augment the sum-total of generally available informa tion about one or more compartments of the securities market. Attention is directed in this study to regional exchanges and their relationship with both the national exchanges and the over-the counter channels. Unlike their affluent brethren in New York City, regional exchanges have received little consideration in in vestment literature.

Although description has its place, evaluation is the keynote of the succeeding discussion. At least two fundamental questions arise in connection with research into the structure of the securities market. One relates to the efficiency with which the functions as signed each subdivision are (or might be) executed. The other con cerns the appropriateness of the designated tasks. Each of these aspects is afforded treatment in this study.