What Is a Jobber?
Key takeaways
– “Jobber” (or “stockjobber”) was the slang name for a market maker on the London Stock Exchange (LSE) prior to the market reforms of October 1986 (“Big Bang”). Jobbers held stock on their own books and created liquidity by continuously buying and selling securities for their account. (Investopedia; Attard 2000)
– Jobbers earned profit from the bid–ask spread; they did not act as brokers for clients. Brokers acted for clients and transacted with jobbers when executing customer orders. (Investopedia)
– The jobber system evolved in the 19th century, peaked in the early 20th century, and effectively disappeared in 1986 when the LSE deregulated, introduced negotiated commissions, and moved toward electronic trading. (Institute for Historical Research; The Independent)
Understanding jobbers: role, mechanics, and economic function
– Role: Jobbers were professional market makers who held inventories of securities and quoted continuous two‑way prices (bid and offer) on the trading floor. Their function was to provide immediacy and liquidity—allowing investors to buy and sell without having to find a specific counterparty. (Attard 2000)
– Mechanics: Jobbers stood between buy and sell orders placed by brokers. Brokers, prohibited from making markets themselves under traditional LSE custom and later formalized rules, routed client orders to jobbers who either filled the order from inventory or matched it with another order. Jobbers profited from the spread between the buying price (bid) and selling price (ask). (Investopedia)
– Economic function: By holding inventories and continuously quoting prices, jobbers reduced search costs and price uncertainty for investors. Their activity supported market efficiency and smoother price discovery in an era when electronic matching and screen trading didn’t exist. (Attard 2000)
How did stockjobbing originate?
– Historical context: Stockjobbing grew out of the late-17th and 18th century Financial Revolution in Britain, which produced tradable joint‑stock companies and a regulated stock exchange. As securities trading expanded, specialists emerged to ensure continuous tradable markets for new financial instruments. (Investopedia)
– Institutionalization: During the 19th century the jobbing role became formalized by custom and by 1909 by explicit LSE rules that separated the market‑making (jobber) function from broking. By 1914 there were hundreds of jobbing firms, including many one‑person operations. (Institute for Historical Research; Attard 2000)
Why jobbers declined and when they disappeared
– Structural changes: The 20th century saw growth of institutional investors, larger capital requirements to manage risk and inventory, and technological change. These factors consolidated jobbing into fewer, larger firms.
– The Big Bang (October 1986): UK financial deregulation eliminated fixed commissions, allowed external ownership, and introduced electronic, screen‑based trading. These reforms made the traditional jobber role obsolete; jobbers ceased to exist on the LSE after the Big Bang. (The Independent; Investopedia)
Difference between a jobber and a broker
– Jobber (market maker): Trades on own account, holds inventory, continuously quotes bid and ask prices, earns spread. Acts as principal in trades. (Investopedia)
– Broker: Executes orders on behalf of clients, earns commissions or fees, does not make market or hold inventory for public customer orders (under historical LSE rules). Acts as agent for clients. (Investopedia)
– Practical implication: Historically, a client couldn’t directly deal with a jobber—orders went through brokers. After the Big Bang and modern market structures, the lines blurred: brokers can have trading desks and firms can combine broking and market‑making functions subject to regulation.
Special considerations and historical record
– Limited paper trail: Jobbers kept few records; much of our knowledge comes from oral histories and institutional archives. The Centre for Metropolitan History has compiled interviews with former jobbers that are a key primary source for the system’s last half‑century. (Institute for Historical Research)
– Scale vs. numbers: Although the number of jobbing firms fell dramatically during the 20th century, this did not necessarily reduce marketability—consolidation concentrated liquidity providers into larger firms better able to carry inventory and risk. (Attard 2000)
– Broader meaning: Outside finance, “jobber” can also mean a small wholesaler or middleman in retail trades.
Modern equivalents and consequences
– Today’s equivalents include registered market makers, designated market makers, specialists (in some exchanges), and electronic liquidity providers. These participants perform similar liquidity‑provision functions but operate under different regulatory frameworks and with modern technology.
– Technology, higher capital and compliance standards, and algorithmic trading have changed how liquidity is supplied; profit sources still include spreads but also rebates, payment for order flow (in some jurisdictions), and high‑frequency strategies.
Practical steps
For individual investors who want to understand market liquidity and trading costs
1. Check liquidity metrics: Before trading a security, look at average daily volume and the typical bid–ask spread—narrow spreads and high volume indicate greater liquidity.
2. Use order type wisely: Use limit orders to control execution price when liquidity is thin; use market orders when liquidity is high and immediacy matters.
3. Review exchange rules and market maker obligations: Understand whether a security has designated market makers and what their quoting obligations are—this affects expected liquidity and price stability.
4. Monitor execution quality: After execution, review fills for price improvement or deterioration relative to quotes and market conditions.
For historians or researchers studying jobbers and market structure
1. Start with secondary literature: Read overviews such as Attard’s “Making a market. The jobbers of the London Stock Exchange, 1800–1986” and Philip Auger’s The Death of Gentlemanly Capitalism for context. (Attard 2000; Auger 2000)
2. Consult primary source archives: Use the Centre for Metropolitan History oral histories and institutional archives of banks and broking firms. (Institute for Historical Research)
3. Corroborate across sources: Because formal records are sparse, triangulate oral histories with exchange minutes, regulatory filings, newspapers, and contemporaneous accounts (e.g., The Independent’s coverage of Big Bang).
4. Preserve and document analog materials: If you encounter personal papers or interviews, follow best practices for archival cataloguing and digital preservation.
For professionals or firms exploring market‑making today (general guidelines)
1. Understand regulatory requirements: Review exchange and regulator rules for market‑making (registration, capital, reporting, quoting obligations) in your jurisdiction.
2. Assess capital and risk systems: Market‑making requires capital to carry inventory and risk‑management systems for rapid position changes.
3. Build or license technology: Real‑time pricing, connectivity to matching engines, and low‑latency systems are typically required.
4. Implement compliance and best execution policies: Ensure order handling meets legal/regulatory standards and internal controls.
5. Start small and scale: Pilot with limited instruments, measure performance and regulatory compliance, then scale operations.
Further reading and sources
– Investopedia. “Jobber.” https://www.investopedia.com/terms/j/jobber.asp
– Attard, Bernard. “Making a market. The jobbers of the London Stock Exchange, 1800–1986.” Financial History Review, Vol. 7, No. 1, 2000, pp. 5–24.
– Institute for Historical Research. “The jobbing system of the London Stock Exchange: an oral history.” (Centre for Metropolitan History oral history archive)
– The Independent. “The day Big Bang blasted the old boys into oblivion.” (coverage of the 1986 LSE reforms)
– Auger, Philip. The Death of Gentlemanly Capitalism. Penguin Books, 2000.
If you’d like, I can:
– Summarize one of the cited academic papers or the oral‑history archive.
– Show how to read and interpret historical bid‑ask spreads in archival quotes.
– Outline the specific regulatory requirements for market‑making in a particular jurisdiction (e.g., UK, US) — tell me which one.