A Call for Quotas

Delmonico's, Wall Street's favorite restaurant, is crowded again and, despite the chill of midwinter, the speculative sap is rising in Manhattan's brokerage community. Last week the Dow-Jones average climbed for the fourth straight week, closing at 888.83, the highest in 20 months; on one day, trading volume on the New York Exchange set a new record: 28,250,000 shares. One single trade of 3,248,000 shares of Allis-Chalmers, the largest in history, exceeded the average daily volume of the Big Board eleven years ago.

The 1971 surge of trading has roused fears that Wall Street may again be heading into a repetition of the paperwork snarl that overwhelmed brokers from 1967 to 1969. Chairman Donald T. Regan of Merrill Lynch, Pierce, Fenner & Smith last week urged that brokerage houses be prohibited through quotas from accepting more trades than they can process without delay. Recognizing the danger signs, the New York Stock Exchange last week ordered one medium-sized firm to limit the volume of its business.

Even though computers have taken over much of the paperwork load, Wall Street may now lack sufficient experienced hands to deal with sustained high volume. About 7,000 employees were laid off last year as firms cut their costs to match their reduced volume. Many of those people have found permanent jobs with banks and insurance companies. If the trading frenzy grows, brokerage back offices "are going to end up in the same predicament again," warns Sam Bard, president of the Committee for Investors' Protection. Plus c,a change, Wall Street has yet to prove that it has learned from old errors.

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