London’s Big Bang: A Case Study of Information Technology, Competitive Impact, and Organizational Change¹

Abstract:

The London Stock Exchange’s Big Bang on October 27, 1986, marked the arrival of sweeping and long-awaited deregulation. Numerous changes occurred simultaneously, including elimination of fixed brokerage commissions, a marked increase in the number of market participants, changes in the structure and ownership of trading firms, and, perhaps most importantly, swift movement of securities trading away from the floor of the Exchange. This remains the most rapid and complete regulatory reform of any market, and the most striking example to date of a regulatory event engineered to benefit the local financial industry. The transformation was accomplished in large part through the Exchange’s implementation of a screen-based dealing system. Since the overhaul of its established securities trading practices, London’s financial markets have undergone profound change while continuing to operate smoothly; a number of benefits have been realized.

Key Words and Phrases:

• information systems and securities trading
• strategic information systems
• London’s Big Bang

Additional information

Notes on contributors

Eric K. Clemons

Eric K. Clemons is Associate Professor of Decision Sciences and of Management at the Wharton School of the University of Pennsylvania. His research and teaching interests include strategic information systems, telecommunications technology and its commercial application, and the use of information systems in international securities markets. Additionally, he is Project Director for the Reginald H. Jones Center’s Sponsored Research Project in Information Systems, Telecommunications, and Business Strategy.

He has an S.B. in Physics from MIT and an M.S. and Ph.D. in Operations Research from Cornell University. In addition to fourteen years on the faculty of Cornell, Wharton, and Harvard, he has professional experience as a consultant in both the private and public sectors, and in executive education both domestically and abroad. Additionally, he has worked for the New York and London stock exchanges, and the congressional Office of Technology Assessment, examining global trends in securities trading. He is currently a member of the National Council of the Association for Computing Machinery, and a member of the editorial board of JMIS, Information and Management, and the Computing Practices Section of the Communications of the ACM. He serves as a member of the Office of Technology Assessment Advisory Panel for a study on Securities Markets and Information Technology.

Bruce W. Weber

Bruce W. Weber is a Ph.D. candidate in the Decision Sciences Department of the Wharton School of the University of Pennsylvania. He is also a Research Fellow in the Reginald H. Jones Center’s Project in Information Systems, Telecommunications, and Business Strategy. His education includes an A.B. in Applied Mathematics from Harvard University, and an M.S. in Decision Sciences from the Wharton School. He has done independent consulting for the New York Stock Exchange and the International Stock Exchange, London, and has served as a research contractor for the U.S. congressional Office of Technology Assessment.