imported>Doug Williamson |
imported>Doug Williamson |
| Line 1: |
Line 1: |
| 1. ''UK - London Stock Exchange.''
| | ''Long term funding''. |
|
| |
|
| 'Big Bang' refers collectively to three major changes at the London Stock Exchange which took effect on 27 October 1986:
| | A covenant in a loan agreement which becomes effective on the occurrence of a certain event in the future. Used to enable loan agreements to have fewer and less onerous ('lite') covenants, typically to conform to other loans of the same borrower. |
| *The introduction of negotiated brokerage commissions, rather than the fixed commission system previously in force.
| |
| *Allowing members both to make markets and to act as brokers ('dual capacity'), rather than being restricted to one role or the other ('single capacity') as in the past.
| |
| *Widening of membership and ownership rules, allowing foreign banks to enter the market.
| |
|
| |
|
| | A common springing event is the level of utilisation of a loan facility at which time covenants such as ICR ([[interest cover]] ratio) and [[gearing]] come into effect. |
|
| |
|
| There was also a significant change to introduce electronic trading, replacing the previous 'open outcry' system.
| | Springing covenants are a form of [[contingent covenant]]. |
|
| |
|
|
| |
| These changes led to a period of rapid expansion, as foreseen and intended by the UK government at the time, led by Prime Minister Margaret Thatcher.
| |
|
| |
| Some commentators link Big Bang with subsequent excessive risk taking - especially the use of bank depositors' funds for speculative activities - contributing to the conditions which led to the Global Financial Crisis of 2007/08 and onward.
| |
|
| |
|
| |
| 2.
| |
|
| |
| By extension, the term 'Big Bang' is also used to refer more generally to the changes in - and expansion of - financial markets in the UK (and elsewhere) in the mid-1980s.
| |
|
| |
|
| |
| 3.
| |
|
| |
| By analogy, similar sudden changes in - and subsequent potential expansion of - other markets are also sometimes known as 'Big Bang' events.
| |
|
| |
|
| |
| The rationale for adopting a 'Big Bang' approach to reforms is that sudden changes may be easier for market participants to engage with and to respond appropriately, rather than incremental changes.
| |
|
| |
| An alternative view is that such '[[cliff edge]]' events should be avoided, preferring incremental change.
| |
|
| |
|
| |
| ''The source of the term 'Big Bang' is in cosmology. The widely-accepted Big Bang Theory is that the universe originated from a tiny fireball which exploded with great speed and violence around 14 billion years ago, expanding and cooling to form galaxies, stars and planets.''
| |
|
| |
|
|
| |
|
| == See also == | | == See also == |
| *[[Black Friday]] | | *[[Incurrence covenant]] |
| *[[Black Monday]] | | *[[Maintenance covenant]] |
| *[[Black Wednesday]]
| |
| *[[Broker]]
| |
| *[[Broker-dealer]]
| |
| *[[Cliff edge]]
| |
| *[[Global Financial Crisis]]
| |
| *[[Institute of Business Ethics]]
| |
| *[[London Stock Exchange]]
| |
| *[[Market maker]]
| |
| *[[Open outcry]]
| |
| *[[Thatcherism]]
| |
| * [[Universe]]
| |
|
| |
|
| [[Category:Accounting,_tax_and_regulation]] | | [[Category:Long_term_funding]] |
| [[Category:The_business_context]]
| |
| [[Category:Financial_products_and_markets]]
| |
