What was Big Bang?

Big Bang describes a package of reforms to the London securities markets that took effect in October 1986. The name arises from the decision to introduce all the changes at once, rather than piecemeal. Big Bang has been credited with assuring London's position as Europe's premier financial centre.

Where have you heard about Big Bang?

No discussion of the huge growth of the City as an investment hub during the last 30 years is complete without a reference to Big Bang. Investment guides will mention it and your financial adviser or fellow investors may discuss the legacy of the changes.

What you need to know about Big Bang.

Big Bang was triggered by two separate developments. One was the abolition of sterling exchange controls in 1979, which ended the protected status of London securities markets. The other was a monopoly-law investigation into the Stock Exchange rule that separated brokers, who dealt on behalf of clients, from jobbers, who made a market in shares. The scrapping of this rule, thus the dropping of the investigation, was a key aspect of Big Bang, as were changes to the government bill market.

Big Bang allowed brokers and jobbers to merge with each other and with merchant banks to form the investment banks that we know today. It allowed also such banks to be owned by clearing banks , which was to prove controversial in light of the 2008 financial crisis. Ultimately, Big Bang opened the way for electronic share dealing to dominate in London.