Thatcher and the Big Bang

LONDON – In the United States, for people of a certain age, Margaret Thatcher was a superstar, and Americans have been surprised at the sharply divided views on display in the Britain that she governed for 11 years. But Britons were not astonished. Like Tony Blair, Thatcher has long been a British product with more appeal in export markets than at home.

All aspects of her legacy are earnestly disputed. Was she prescient about the problems of European monetary union, or did she leave Britain isolated on the fringes of the continent? Did she create a new economic dynamism, or did she leave the United Kingdom bitterly divided, more unequal, and less cohesive than before? Did she destroy the power of vested interests and create a genuine meritocracy, or did she entrench bankers and financiers as the new elite, with disastrous consequences?

Indeed, one issue that has come under the microscope is Thatcher’s reforms of the City of London in the late 1980’s. In 1986, her government was instrumental in what is known colloquially as the “Big Bang.” Technically, the main change was to end “single capacity,” whereby a stock trader could be a principal or an agent, but not both.

Before 1986, there were brokers, acting for clients, and jobbers, making a market, and never the twain could meet. This system had been abandoned elsewhere, and the reform opened London to new types of institutions, especially the major US investment banks.