What Is a Jobber?

What Is a Jobber?

Let me explain what a jobber is in straightforward terms. In the world of finance, 'jobber' is a slang term for a market maker on the London Stock Exchange before the mid-1980s. These individuals, also known as stockjobbers, functioned as market makers by holding shares in their own inventories. They created essential market liquidity by buying and selling securities and by matching investors' buy and sell orders through brokers, who were prohibited from making markets themselves.

You might also hear 'jobber' used in a different context, referring to a small-scale wholesaler or middleman in the retail goods trade. But in this discussion, I'm focusing on the financial sense.

Understanding Jobbers

If you're curious about the details, know that little is documented about jobbers' day-to-day activities because they kept minimal records. In the early 19th century, London boasted hundreds of jobbing firms, but their numbers dropped sharply throughout the 20th century until they vanished in October 1986. That was the month of the financial 'Big Bang,' a massive overhaul of the London Stock Exchange's operations. Suddenly, the financial sector in London was deregulated, fixed commissions gave way to negotiated ones, and electronic trading took over.

Jobbers didn't leave behind much in the way of records, and neither did journalists or other observers provide detailed accounts. That's why oral histories from banks, stockbroking firms, and related entities form the main historical record. The Centre for Metropolitan History has even put together an archive of interviews with former jobbers, preserving the last half-century of this unique aspect of London's financial life.

Special Considerations

Consider how the jobber system developed into something we'd recognize as modern during the 19th century, as the variety of securities expanded. At least half of the London Stock Exchange members started specializing in continuous markets for leading security types. The line between these market makers—jobbers—and the brokers who interacted with them for the public was clear but based on custom until 1909, when it was formalized in the exchange's rules. By 1914, over 600 jobbing firms existed, including many solo operations.

Those figures steadily fell as institutional investors replaced private ones, and the capital needed for jobbing skyrocketed. By the time of the Big Bang, only five major jobbing firms remained on the exchange floor. This drop in numbers didn't mean the system's market-making effectiveness declined, though.

How Did Stockjobbing Originate?

To understand the roots, stockjobbing—the professional trading of stocks on an exchange—began in the 1690s after Britain's Financial Revolution. These reforms led to joint-stock companies with freely tradable shares, which in turn created regulated stock exchanges and the need for jobbers to handle trading in those shares.

When Did Jobbers Disappear?

Jobbers officially ended their run on British stock exchanges in October 1986, aligning with the UK's abrupt financial market deregulation under Prime Minister Margaret Thatcher. This shift eliminated the need for stockjobbers in facilitating trades, and the push for electronic, screen-based trading sealed their fate.

What Was the Difference Between a Jobber and a Broker?

Let me clarify the key distinction for you. A stockjobber operated like a market maker, buying and selling shares from their own account and profiting from the bid-ask spread. In contrast, a stockbroker handled orders for customers, earning commissions. Brokers would often buy or sell securities from jobbers on behalf of their clients.