Background
A jobber is a term used historically in the stock market to refer to a dealer who trades in shares or commodities, maintaining a stock of the asset and dealing as a principal. Jobbers are fundamental participants in financial markets, ensuring liquidity by continuously buying and selling assets.
Historical Context
Jobbers were prevalent in financial markets during the 19th and early 20th centuries. They played a significant role on trading floors, particularly in stock exchanges such as the London Stock Exchange. Their operations were integral to market efficiency, as they provided instant buying and selling opportunities. Over time, as markets became more sophisticated and technologically driven, the role of the jobber evolved and the term gradually fell out of use, substituted often by the modern term “market-maker.”
Definitions and Concepts
Jobber: A dealer in shares or commodities who holds a stock of the asset and trades as a principal. Jobbers are distinguished from brokers, who facilitate transactions by putting people who want to buy and sell in touch with each other, without trading for their own accounts.
Market-Maker: The modern equivalent of a jobber. Market-makers provide liquidity in financial markets by standing ready to buy or sell at publicly quoted prices.
Major Analytical Frameworks
Classical Economics
Classical economics does not specifically address the role of jobbers, but it recognizes the importance of market intermediaries in enabling efficient distribution of resources.
Neoclassical Economics
Neoclassical frameworks stress the importance of liquidity and information in efficient market functioning, implicating a role for jobbers (market-makers) as facilitators of these components.
Keynesian Economic
While Keynesian economics focuses largely on aggregate demand and government intervention, jobbers can play a pivotal role in ensuring market functioning during different economic cycles.
Marxian Economics
Marxian economics might critique jobbers as part of the speculative processes inherent to capitalist markets, highlighting the role of financial intermediaries in perpetuating market inequalities.
Institutional Economics
Institutional economics would examine the role of jobbers within the regulatory and normative structures that shape market behaviors.
Behavioral Economics
Behavioral economics would examine how jobbers’ behaviors in the market may influence prices and trading volumes, including the psychological aspects of their trading decisions.
Post-Keynesian Economics
Post-Keynesian perspectives might focus on jobbers in the context of financial instability and the systemic risks posed by their trading activities.
Austrian Economics
Austrian economists may emphasize the importance of jobbers in facilitating price discovery and ensuring liquidity, which are crucial for the proper signaling mechanisms in markets.
Development Economics
In underdeveloped markets, the presence of jobbers or similar roles would be essential to improving market depth and accessibility for investors.
Monetarism
Monetarists might emphasize the role of jobbers in ensuring that capital markets are sufficiently liquid to influence monetary policy transmission mechanisms.
Comparative Analysis
- Jobbers vs. Brokers: Unlike brokers, jobbers trade on their own account and take on inventory risk.
- Jobbers vs. Market-Makers: Jobbers are the historical antecedents to modern market-makers, with technological advances defining the evolution.
Case Studies
London Stock Exchange
Historically, the London Stock Exchange featured jobbers who were key market participants until changes in technology and regulation altered the trading landscape.
New York Stock Exchange
On the NYSE, specialists performed similar functions to jobbers, maintaining inventory and liquidity on the trading floor.
Suggested Books for Further Studies
- “A History of the London Stock Market 1945-2007” by George G. Blakey
- “Market Liquidity: Theory, Evidence, and Policy” by Franklin Allen and Gary Gorton
- “Options, Futures, and Other Derivatives” by John C. Hull
Related Terms with Definitions
- Broker: An intermediary who connects buyers and sellers without trading for their own account.
- Market-Maker: A dealer who ensures market liquidity by continuously quoting buy and sell prices for a financial instrument.
- Specialist: A member of a stock exchange maintaining an orderly market in the securities assigned to them, similar to jobbers and market-makers.
