Editorial

Big Bang: Ten years on

London can congratulate itself on being the world's premier international financial centre. Only part of the reason is Big Bang, which happened on October 27 1986 when London's dealing commissions were freed and the single capacity of brokers and stockjobbers was ended.

Things didn't work out quite as expected. The specialist firms were absorbed; their names disappeared; but then their workforce applied themselves to quite different areas of finance. The UK market for shares and gilts didn't change that much ­ it is only last year that the Bank of England sanctioned the widening of the gilt repo market.

No, what changed was that Big Bang provided men, women and machines, and the catalyst of a handy regulatory environment, to fuel an explosion of creativity in offshore financial products. Eurobond trading and foreign exchange were the basis. That developed into a mind-boggling marketplace for over-the-counter trading in interest rates, foreign exchange, debt, equities and commodities. The US might see bigger bond and equity volumes, and more ingenuity in securitization and the use of derivatives. But London became the launchpad for those techniques in the international arena.