THE big bang was on October 27, 1986. It changed the way stocks and shares were traded in the City of London and with it the culture of the London Stock Exchange floor, an amphitheatre that had thrived and survived for centuries on its people, their relationships and a code of honour known as "my word is my bond".
Post-October 27, 1986, was the day it all went "upstairs". The corridors of the stock exchange floor were replaced by banks of computer screens in stockbrokers' offices and the culture went from banter and beer to the sedentary contemplation of a TV screen and a glass of sparkling mineral water. Where once a trade was coloured by a stock jobber's charm and a broker's wit, it was now transported by electrons
On top of that, everyone had to adapt to an unthinkable cultural merge. As jobbers moved in with stockbrokers, East End barrow boys suddenly found themselves in close quarters with West End wide boys. Streetwise toughs met public school toffs. Down-to-earth cockneys met silver-spoon backgrounds with snotty accents. The "market" met the "money".
Many thought it wouldn't last and the permanence didn't really sink in until the builders began to demolish the broker boxes and the jobbers' pitches. Doing business in the sharemarket had changed forever, not least because the other side of the trade didn't have a face and when the person you are shafting isn't going to be in the pub at lunchtime, concern about "honour" and reputation quickly gave way to the profit motive. Where once you wouldn't do something because it wasn't right, now you would do anything as long as it was legal.
The post-big-bang era saw the polite, conversational, friend-for-life stock jobbers at Wedd Durlacher and Ackroyd & Smithers replaced by spikey-haired transients whose idea of a conversation was when they smashed the screen price against you, the electronic equivalent of saying "Up yours d@#khead".
With the anonymity of the screen, greed became the creed and because you didn't have to look anybody in the eye, morals and manners went out of the window. Fast forward 25 years and the anonymity factor has proliferated through the internet, and the lack of morals with it.
But the most lasting and perhaps damaging consequence of the big bang was something less obvious and more costly. Forget the loss of morals, it was time frame. Everything became more short term at tremendous cost.
To give an example, after the big bang I used to sit next to "Smash", a hooligan more at home lobbing darts into the opposition supporters at a Millwall game than attending the annual UBS Phillips & Drew corporate fly-fishing day. He was a real character and one of the many stock jobbers who adapted to "life upstairs".
When your cultural background is making cash on a market stall in Brick Lane, market making at UBS Phillips & Drew with a live profit and loss was Brick Lane on steroids and he loved it.
He became an expert short-term trader, in and out all day, the master of stampedes, the exploiter of lemmings and a devilish manipulator of both fear and overconfidence.
Wherever the action was, he was there. He would watch small stocks intensely, sometimes for long periods (two hours). He could dominate a day's trade, create breaks, start collapses. He was always one microsecond ahead of the herd. We were in awe.
Eighteen years later I went back to London. Smash was still working a desk, had a facial tick, been bankrupt, looked 40 years older, still carried a wedge of cash instead of a credit card and had yet to find the time to "settle down". A product of the big bang, a product of being short term in the long term.
Thanks to technology and demand, our financial time frame is only going to get shorter and shorter. It is progress, but like the big bang, it is not going to help. It turns out that no one progresses in the long term by focusing on the short term. Maybe we should consider that the next time we are "wowed" by what we can do rather than what we should do.
Marcus Padley is a stockbroker with Patersons Securities and author of sharemarket newsletter Marcus Today. For a free trial go to marcustoday.com.au. His views do not necessarily reflect those of Patersons.
Frequently Asked Questions about this Article…
What was the 'Big Bang' (October 27, 1986) and how did it change the London Stock Exchange trading system?
The article explains the 'Big Bang' as the sweeping market reform on October 27, 1986 that replaced the open-outcry amphitheatre of the London Stock Exchange with electronic screens. Broker boxes and jobbers' pitches were demolished, trades began to be executed electronically, and the visible, face-to-face trading culture was transformed into a screen-driven, office-based model.
How did electronic trading and anonymity affect trading behaviour and market morals?
According to the article, once trades were done via screens and the counterparty had no face, concerns about honour and reputation faded and anonymity encouraged greed. Traders moved from conversational, reputation-based dealings to profit-driven behaviour where people would do anything legal to make money, and 'morals and manners went out of the window.'
What cultural changes followed as jobbers and brokers were forced to work together after the Big Bang?
The article describes a cultural merge where East End market stall traders and West End financial types were suddenly working side by side. Streetwise 'barrow boys' mixed with public-school backgrounds, creating clashes in style and behaviour as market culture shifted from banter and personal relationships to more transactional, electronic trading.
Why does the article say the most damaging consequence of the Big Bang was the shortening of time frames?
The article argues that the Big Bang made everything far more short-term: trading strategies, decision horizons and incentives shifted to rapid in-and-out activity. That short-term focus came at great cost, producing traders who exploited quick moves and stampedes rather than supporting longer-term market stability and value creation.
Who is the trader nicknamed 'Smash' and what lesson does his story illustrate for everyday investors?
'Smash' is a colourful example in the article of a trader who thrived as a short-term market maker after the Big Bang — dominating day trades, manipulating small-stock moves and exploiting herd behaviour. Eighteen years later he was older, bankrupt at one point and still entrenched in short-term habits. His story is used to caution that short-term success can come with long-term personal and financial costs.
How does the article link modern technology and the internet to trading behaviour experienced after the Big Bang?
The article states that technology and the internet have proliferated the anonymity introduced by the Big Bang, further shortening financial time frames and reinforcing the same short-term, profit-first behaviours. While it's progress technologically, the piece suggests this does not necessarily help long-term outcomes.
Which firms and people does the article mention to illustrate the old and new trading eras?
To illustrate the contrast, the article mentions old-style stock jobbers and firms such as Wedd Durlacher and Ackroyd & Smithers, and references market making at UBS Phillips & Drew. It also names Marcus Padley, a stockbroker with Patersons Securities and author of the Marcus Today newsletter, who provides the commentary in the piece.
What practical takeaway does the article offer everyday investors worried about short-term market pressures?
The article's practical takeaway for everyday investors is a reminder to prioritise longer-term thinking: technology and faster trading can 'wow' us with what is possible, but focusing on the short term rarely helps long-term progress. Investors should consider whether they are doing what they should — not just what they can — and resist being driven solely by short-term market noise.
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