P564ORACLE 564 Mon10 Feb C4 1714:18
1/6
Year of the
Big Bang
1986 is the year of the Big Bang. No,
it's not another blockbuster movie, but
the beginning of a new world in the
City, says Sue Gorska.
Back in 1978 the Office of Fair Trading
referred the Stock Exchange to the res-
trictive practices court, having taken
a close look at its rule book. Meetings
with the Government followed and a deal
struck ─ the Stock Exchange would be
left alone, providing it agreed to
abolish its fixed commission charges
and to operate as a free market. These
changes have become known as Big Bang.
more follows >
Your Money ...560 Tax Rates ...565
RECRUITMENT ADVERTISING ON 496
P564ORACLE 564 Mon10 Feb C4 1709:03
2/6
Year of the
Big Bang
Big Bang will mean three major changes
in the Stock Market: the abolition of
fixed commissions; the introduction of
'dual capacity' companies; and the
opportunity for outsiders to own 100%
of Stock Exchange companies.
At present, outsiders are only allowed
to own 29.9% of a Stock Exchange firm
but, on March 1st, this will be raised
to 100%. Already Quilter Goodison, the
stockbroking firm headed by the Stock
Exchange Chairman, has agreed to be
bought by Paribas, the French state-
owned banking group in April.
more follows >
Your Money ...560 Tax Rates ...565
Barclaycard Theatre Guide see p231
P564ORACLE 564 Mon10 Feb C4 1702:10
3/6
Year of the
Big Bang
Big Bang will also mean the end of the
Stock Exchange's fixed commission
charges ─ at present set at 1.65% of
the total share deal price, with a min-
imum of £10-20 depending on the broker.
On October 27th, the date of the change
this commission charge will be open to
negotiation and it's likely that the
big institutional investors (eg pension
funds, insurance companies) with the
most financial muscle will get the best
deal. Small investors could end up pay-
ing more, though some brokers may offer
them a no-frills discount service ─ no
advice or research, just the basic
buying and selling of shares.
more follows >
Your Money ...560 Tax Rates ...565
P564ORACLE 564 Mon10 Feb C4 1712:57
4/6
Year of the
Big Bang
Since 1909 the two roles of stockbroker
and jobber have been kept separate, a
broker acting as an agent, a jobber
acting as principal, holding or dealing
in the shares. The fixed commission was
originally introduced to discourage
brokers from going directly to the
market themselves ─ they received a set
commission in return for channelling
all their business through the jobbers.
Big Bang will open the way for dual
capacity firms which will be able to
play both parts and the last year has
seen a flurry of takeovers in the City
as firms prepare for the changeover.
more follows >
Your Money ...560 Tax Rates ...565
P564ORACLE 564 Mon10 Feb C4 1703:12
5/6
Year of the
Big Bang
On October 27th, Big Bang day, the
Stock Market will move into the 21st
Century by going electronic. At present
a Stock Exchange Automated Quotations
System (SEAQ) is being designed which
will be able to handle around 70,000
transactions per hour, covering 3,500
securities.
The new broker-dealers won't have to go
near the Stock Exchange floor. They'll
be able to check prices and deal by
pressing a button in their own offices
Provincial stockbrokers could end up
better off because, with the new tech-
nology, they'll be able to act as fast
as firms based in London.
more follows >
Your Money ...560 Tax Rates ...565
P564ORACLE 564 Mon10 Feb C4 1711:05
6/6
Year of the
Big Bang
No-one knows what the long-term effects
of Big Bang will be. When the New York
commissions were deregulated on Mayday
1975, private investors ended up paying
less for a no-frills service offered by
discount brokers but there's no
guarantee that will happen here.
Good news for small investors is the
Stock Exchange's recently announced
plan to boost share ownership from the
present 6% of the adult population to
nearer 17%. One incentive proposed is
lower transaction costs for small share
deals once Big Bang has happened.
more follows >
Your Money ...560 Tax Rates ...565
BUYING/SELLING A CAR? LOOK AT 496
P564ORACLE 564 Mon10 Feb C4 1711:12
ADVERTISEMENT Your Money follows >
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