The Pacific Stock Exchange will dispose of its money-losing clearing and depository businesses, resulting in the eventual layoff of between 350 and 400 mostly clerical employees, or about half of the exchange's total staff, exchange officials said Wednesday.
The businesses, which largely handle back-office processing and storage of securities for clients, accounted for just under half of the exchange's 1985 revenue.
The move to drop them stems in part from the recent loss of two of the exchange's biggest depository customers: the California Public Employees Retirement System and the California State Teachers Retirement System.
The two, among the nation's largest pension funds, are taking their depository business to Depository Trust Co. of New York, according to Maurice Mann, chairman and chief executive of the exchange.
The moves are part of an increasing concentration of the custodial and depository business in a handful of New York and Boston institutions and away from West Coast firms.
"The clearing and depository operations have not been profitable for several years," Mann said in a statement. "The recent loss of two major California public pension funds further aggravated a situation that makes the continued operation of the clearing/depository functions infeasible.
"Resources diverted to support these activities can now be applied to the main purposes of the exchange--its trading functions," Mann added.
The exchange has trading floors in San Francisco and Los Angeles.
The businesses accounted for $18.1 million in revenue in 1985, 43% of the exchange's total revenue of $41.9 million. However, they incurred a pretax loss of $1.1 million in 1985, reducing the exchange's total net income in the year to $971,000. Results for 1986 are not yet available.
Of the staff to be let go under the move, all but about 50 work in San Francisco. The 50 include about 30 in Los Angeles and 20 in other cities, exchange spokesman Don Alexander said.
Mann said the exchange would try to sell the businesses.
"We're looking for someone to absorb us under relatively favorable terms," he said in a telephone interview.