Quantcast

City marks 25 years since the Big Bang

0

The London Stock Exchange’s Big Bang, which set the capital on course to become one of the world’s most important financial centres, took place 25 years ago on Thursday.

The City began a new era on October 27 1986 when regulations were loosened and a period of rapid expansion began. The day marked the end of “open outcry” and saw dealers abandon the busy trading floor and instead use telephones and computer screens to trade stocks and shares.

Small private investors found it easier to invest in stocks after the Big Bang because fixed commission charges were scrapped. Also abolished was the strict separation of stockbrokers and jobbers, who were the middlemen.

The changes resulted in the City becoming a more open and fluid environment with fierce competition and many acquisitions and mergers, where previously it had been something of an old boys’ network where everyone knew their place.

Dr Eamonn Butler, writing on the Adam Smith Institute’s blog, praised the changes brought about by the Big Bang and said nearly 10 million people have a stake in British business thanks to the alterations made to the system 25 years ago.

He said: “People also say the Big Bang produced a ‘loadsamoney’ culture and huge salaries in the financial sector. Wrong. The deregulation certainly opened up new markets, and brought in more capital that allowed firms to grasp those new opportunities. And computerisation, which came in at the same time, made that new business hugely more efficient. The rise in wages and profits simply reflected that new productivity.”

The Big Bang started a boom in the financial industry, with the total values of equities traded increasing from £161bn to £1.1tn last year. Tax revenues from the City have become increasingly more important to the UK.

The former home of the Stock Exchange, Drapers’ Hall in Throgmorton Avenue in the City of London, played host to a charity fundraising party dedicated to those who worked on the trading floor on Wednesday night. The London Stock Exchange moved to its current home, Paternoster Square, in 2004.

Co-organiser of the event, Paul Fellerman, said: “It is a chance to catch up with both old friends and colleagues to reminisce about the good old days and at the same time raise funds for three wonderful charities.”




Share.