Big bang

The event that took place on October 27th 1986 and transformed the way in which the London Stock Exchange operated. It resulted from a deal between the government and the stock exchange in which the government dropped moves to challenge the exchange's restrictive practices in return for various liberalization measures.

• The exchange scrapped the obligations that its members had to be either wholesalers of shares (jobbers) or brokers who dealt directly with investors.
• Brokers became free to supply clients with shares held in their own account and they could, if they wished, become market makers in shares.
• Restrictions on ownership of exchange member firms were first relaxed and then dropped, unleashing a flood of money into London as various financial conglomerates bought London jobbing and broking firms.
• A screen-based system of trading stocks (Stock Exchange Automated Quotations - SEAO) closely modeled on the NASDAQ system was introduced, leading to the demise of floor trading on the exchange.

The abolition of exchange controls by the UK government in 1979 made these moves almost inevitable. The London market had to adapt to the globalization of share trading or it would have become a backwater.