Big Bang (financial markets)

The phrase Big Bang, used in reference to the sudden deregulation of financial markets, was coined to describe measures, including abolition of fixed commission charges and of the distinction between stockjobbers and stockbrokers on the London Stock Exchange and change from open outcry to screen-based electronic trading, effected by UK Prime Minister Margaret Thatcher in 1986.

The Big Bang was the result of an agreement in 1983 by the Thatcher government and the London Stock Exchange to settle a wide-ranging antitrust case that had been initiated during the previous government by the Office of Fair Trading against the London Stock Exchange under the Restrictive Trade Practices Act 1956.

In 2010, Nigel Lawson, Margaret Thatcher's Chancellor of the Exchequer at the time of Big Bang, appeared on the BBC Radio Four programme Analysis to discuss the banking reform.

I'd taken for granted that separation, as by custom and practice we'd had that all those years (we'd always had it), but it was a completely unforeseen consequence of the stock exchange reforms"[8].John Reed (a former Citigroup banker) says that, “we were simply ignorant of the risks that we were getting into” (from the repeal of Glass-Steagall in 1999).

He attributes its repeal (in the United States) as being due to his customers (“big international institutions”) wanting to issue commercial paper, instead of borrowing directly from banks,[9] as well as from the Big Bang, due to “globalised markets” and “inter-connected capital markets” making it difficult when there is one regime in London and a different one in New York[10].In 2011 former British Prime Minister Gordon Brown expressed regret at not implementing tougher regulations during his tenure of chancellor between 1997 and 2007, responding to "relentless pressure" from the City not to over-regulate.