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. These restrictive practices included the London Stock Exchange's rules establishing fixed minimum commissions, the "single capacity" rule, the requirement that both brokers and jobbers should be independent and not part of any wider financial group, and the stock exchange's exclusion of all foreigners from stock exchange membership. The day the London Stock Exchange's rules changed on 27 October 1986 was dubbed "Big Bang" because of the increase in market activity expected from an aggregation of measures designed to alter the structure of the financial market. The effect of Big Bang led to significant changes to the structure of the financial markets in London. The changes saw many of the old firms being taken over by large banks both foreign and domestic and would lead in the following years to further changes to the regulatory environment that would eventually lead to the creation of the Financial Services Authority.
Consequences
The effects of Big Bang were dramatic, with London's place as a financial capital decisively strengthened, to the point where it is arguably the world's most important financial centre. The boom resulted in the relocation of institutions into new developments in the nearby Isle of Dogs area, particularly that of Canary Wharf. Although the "Big Bang" eased stock market transactions there is a debate in the UK about how far it affected the 2007–2012 global financial crisis. In 2010, Nigel Lawson, Thatcher's Chancellor at the time of Big Bang, appeared on the radio programme Analysis to discuss the banking reform. He explained that the 2007–2012 global financial crisis was an unintended consequence of the "Big Bang". He said that UK investment banks were previously very cautious, as they operated with their own money, but after merging with major retail banks, the depositors' savings were put at risk, and according to the programme this led U.S. banks to follow suit. 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.
Similar events
Subsequent similar actions, such as the deregulation of the Japanese financial markets circa 1997, have analogously also been tagged with the phrase Big Bang.
