Twenty years ago today the London Stock Exchange experienced one of the most dramatic revolutions ever to hit the world's financial markets.
October 27, 1986 was "Big Bang" day in the City of London.
Just as astrophysicists attribute the creation of the universe to a single explosion of matter and energy, so London's pre-eminent position as one of the world's powerhouses of capitalism was, it is argued, due to the events of a single day in history.
In itself, the City's Big Bang does not appear to have been all that dramatic. In essence, what happened was the split roles of stockbroker and jobber ended, along with the fixed commissions that made trading in equities an expensive business open only to institutions and wealthy individuals.
But the impact was profound.
Big Bang blew away the cosy, clubby, claret-fuelled world of the old-fashioned stockbroker who never began work before 10am, who enjoyed long lunches as a matter of course, who finished at 4.30 and who needed a lie down if he had to deal with sums exceeding six figures.
In its place it ushered in an era of frantic, round-the-clock trading in mega-sums by traders who eat sandwiches at their desks instead of gorging on three courses in panelled City dining rooms and who have more allegiance to Arsenal than the gentleman's clubs of Mayfair and Belgravia.
It was, in the words of former NatWest and Schroders stockbroker Philip Augur in his 2000 book of the same name, The Death of Gentlemanly Capitalism.
In fact, the pre-Big Bang world now seems as remote as Hansom cabs and bustles. As far as the generation of traders that has grown up since, it might have happened 100 years ago, not 20.
Ironically, though, the revolution itself had its origins in what seems now to have been a private deal struck between two gentlemen.
Prior to Big Bang, the London Stock Exchange, that august establishment in Throgmorton Street, EC2, was going to have its collar felt by the Office of Fair Trading after the Labour Government of the 1970s extended restrictive practices legislation from goods to services.
The Exchange's host of rules and regulations that effectively barred it to outsiders made it an obvious candidate for reform; reform that would be imposed by the courts, if necessary.
Any relief the City's grandees might have felt when Margaret Thatcher arrived at 10 Downing Street in 1979 was short-lived.
She hated anything that smacked of a closed shop, and the Stock Exchange was the closed shop par excellence.
What she didn't want, though, was to see the issue dragged through the courts. Even in the fusty old world that existed pre-Big Bang, the City was a major part of the British economy – thanks in part to the excessive regulation imposed then, as now, on Wall Street – and a prolonged legal battle could have been damaging.
So, the then chairman of the Stock Exchange, Sir Nicholas Goodison, sat down with the then Trade and Industry Secretary, Cecil Parkinson, to cut a deal.
The Exchange would sweep away all of its entrenched restrictive practices in exchange for the Government calling off the OFT.
But it seems to have taken the Iron Lady herself to convince Sir Nicholas.
Douglas McWilliams, economist at business consultancy the CEBR, recalls Lady Thatcher "turning on her charm" to persuade Sir Nicholas of the benefits of Big Bang.
"As he shrank back further and further into the Downing Street sofa, he clearly felt that it would be better to accept the icy winds of competition from the Big Bang than risk the wrath of the redoubtable Lady Thatcher," he said.
Everything, it seemed, was to go.
The fixed scale of commission paid by investors to stockbrokers was abolished meaning that previously expensive commissions fell from an average of two per cent to as little as 0.2 per cent which in itself radically changed the structure of the market. Until then, jobbers and brokers were individuals who operated via partnerships. The new rules meant that outside companies – predominantly American and European investment banks – were able to own these firms and put huge amounts of money behind them.
It was not just the blowing away of the dust and cobwebs of the Stock Exchange that was to transform the City, of course.
Two other huge developments were taking place simultaneously.
One was Lady Thatcher's decision to scrap currency exchange regulations – a move that was to see massive amounts of foreign exchange flowing through London.
The other was advent of computers that were powerful but small enough to be adapted to everyday business use.
In fact the biggest physical change to affect the Exchange was the move from open-outcry to electronic, screen-based trading. London became one of the first financial centres in the world to see trading move out of the pits and on to the telephone.
This was achieved by using a screen-based electronic bulletin board system known as Seaq (Stock Exchange Automated Quotations system).
"The result of Big Bang was a far more efficient, competitive market with lower trading costs," the Stock Exchange itself says.
The Bank of England calculated in 1986 that the cost of an institutional deal worth #500,000 would be cut by half while in 1987 a survey of "buy-side participants" (customers) found that 93 per cent had seen their dealing costs cut.
Within a year of Big Bang, the number of market-makers had tripled to 35 while spreads, the difference between the price a dealer buys and sells shares (the "jobber's turn" in pre-Big Bang parlance) had fallen by some 40 per cent.
In the first nine months of 1987 the average number of daily share trades tripled to just under 59,000 – today, it's more than 352,000 – and the Exchange was transacting as much equity business in a month than it had previously done in a year.
Of the Exchange's 300 member firms in 1986, not one was foreign-owned. Today's 360 firms include 86 international members from 15 different countries – more than on either of the Euronext or Deutsche bourses.
Looking back over the past 20 years, Charlotte Black of Brewin Dolphin Securities, says: "The key change for us was the technological one.
"In the old days, when we wanted to get a quote for a client it triggered a long chain of activity.
"We would call the Exchange, who looked for a jobber, who went into the pit to get a quote so that we could call the client back.
"After Big Bang, that quote could be given almost immediately and the cost of execution-only trading for a private client was reduced by as much as 75 per cent.
"Whether they use advisory or execution-only services, the private customer is now close to the markets in a way that would have been unimaginable in 1985 and that has hugely stimulated their interest.
"As a result we are now doing a volume of business that would have been unimaginable in 1985."