What did the big bang do for you?
It is 25 years since boozy stock market lunches and bowler hats went out, and screen trading and US accents came in. Sean Farrell talks to the men who were there
Then and now Slaughter and May partner
The Big Bang was part of the whole stripping away of restrictions as Mrs Thatcher tried to modernise Britain. That didn't mean to say the reforms weren't painful. The miners' dispute was painful and the City reforms, of which Big Bang was the culmination, led to quite quite a lot of people losing jobs and companies disappearing.
We saw the growth of the US investment bank and the decline of the UK merchant bank, which had a very narrow recruitment base of normally independently wealthy English public schoolboys working in the corporate finance department. It changed to an international market and the quality of the work went up.
We've also had the decline of the bowler hat and of the consumption of alcohol in the City. At Kleinwort Benson, if you went for lunch you were offered gin and tonic before lunch, during lunch you were only allowed beer and after lunch you were invited to have Port and brandy. Now that would be deemed inappropriate.
Then Banker at Kleinwort Benson
Now Chairman of Cisi
At Kleinwort Benson, as a partnership we'd have had 45 compliance officers managing 500 people. Everybody was looking over each other's shoulder to make sure their business was compliant. As soon as we were bought by a bank, the shareholder was the beneficiary and we were no longer liable.
Was it a good thing or a bad thing? I think it was inevitable. It pushed the City right into the forefront of international markets and London had a vast amount of turnover taking place in foreign stocks. That natural advantage was complemented by our language and our time zone – you could do it all in a trading day.
The detrimental impacts were on behaviour and ethics. Big Bang pushed much more emphasis on to bonus payments and if you're dealing on the phone or the computer there is not so much human interaction and people behave better if they are face to face. You see this in some of the things that have happened in the past 20 years.
Then Banker at County NatWest
Now life president, winterflood securities
Looking back [to pre-Big Bang], the City was a wonderful place, you met a lot of wonderful people and had a lot of fun. You will never replicate that now in an IT format. If you had disputes they were all forgiven and forgotten in five minutes and that's all gone. It's not as much fun now but we need to be where we are. We couldn't defend the rule book and we'd been living in clubland for years. It was the right thing to do.
Then Analyst at BZW
Now CEO, Tullet Prebon
The Big Bang introduced insuperable conflicts of interest. No longer were investors protected by a broker acting as their agent and trying to get them the best price. Instead, they were dealing with integrated firms which maximised profits by giving investors the worst deal they could as they were principals on the other side of every transaction. Integrated securities businesses also provided merger and acquisition advice to companie, as well as providing research on those companies' shares for investors in those shares, trading in those shares as principals and raising equity or lending money to fund deals.
The potential for profit at the expense of investors as a result were manifold. It may seem inconceivable that any of the Big Bang reforms will ever be repealed but until they are I think we will be condemned to suffer the sort of mistakes, malpractice and calamities which helped to cause the current financial crisis.
Then Graduate trainee, Rowe & Pitman
Now Corporate broker, Daniel Stewart
I had joined this blue-blooded firm three weeks before Big Bang and was learning the ropes on the old Topic screens and a Reuters machine that that rarely worked. After Big Bang, everybody carried on going out to lunch but many of the former partners complained that they had to move back into town from their agreeable country houses because they had to get in to work so early. The biggest change initially was that everyone stopped using the box at the Stock Exchange – the little cubby hole where each stockbroker would sit when on the floor. After that, everything became more telephone-based, which was rather confusing for a few of the old timers.
Then and now Stock market reporter
I joined The Independent just before Big Bang, when the old Stock Market floor on Throgmorton Street was the hub of operations with all the merchant banks a stone's throw away. For jobbers, brokers and reporters like me, Throgmorton Street was the heart of the universe. There was the famous Throgmorton restaurant which had two or three floors and could probably hold approaching 1,000 people and it was packed.
Then after Big Bang people started to move out. I remember when an American firm called Salomon Brothers moved in to Victoria. It broke up the old system.
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