Chapter

Black Hole

Ranald C. Michie

in The London Stock Exchange

Published in print April 2001 | ISBN: 9780199242559
Published online November 2003 | e-ISBN: 9780191596643 | DOI: http://dx.doi.org/10.1093/0199242550.003.0014
 Black Hole

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The Big Bang described in the last chapter appeared to have answered the doubts over the future of the London Stock Exchange, but from the late 1980s onwards into the 1990s, it both waned in importance within the British financial system and faced increasing competition from rival foreign stock exchanges. This chapter discusses the reasons for this, starting in the first section with relations with government, since one uncertainty was the level of freedom from government control that the Stock Exchange was to enjoy. With the disappearance of the Stock Exchange's quasi‐official status in the 1990s, there still remained doubts over the role that it had to play in the area of securities market supervision, and the next section of the chapter discusses this situation, the effect of the changing nature of its membership, the disaster over settlement services (the replacement of the successful TALISMAN (Transfer Accounting and Lodgement for Investors, Stock Management for Jobbers) by TAURUS (Transfer and Automated Registration of Uncertificated Stock) and the subsequent failure of TAURUS), and the eventual successful replacement of the SEAQ (Stock Exchange Automated Quotations) trading system by the SEQUENCE trading system from 1993 onwards. The third section of the chapter looks at the provision of the market, and the fact that with the proposed introduction of specialists or sole traders in 1992, the Stock Exchange had once again been brought to the attention of the Office of Fair Trading; competition was also forcing a re‐examination of the way the Stock Exchange's market was organized, and this resulted in the introduction in 1997 of order‐driven trading in the form of SETS (Stock Exchange Trading Service); this section also looks at the abandonment of the traded options market to LIFFE (London International Financials Futures Exchange) and of any pretensions to the futures market, the decline of the USM (Unlisted Securities Market) and its replacement by AIM (Alternative Investment Market), negotiations with various foreign stock markets, and the changing investment environment. The last part of the chapter looks specifically at the changing membership of the Stock Exchange.

Keywords: AIM; Alternative Investment Market; Britain; competition; economic history; foreign stock exchanges; foreign stock markets; futures market; government control; history; investment; London Stock Exchange; markets; membership; Office of Fair Trading; order‐driven trading; SEAQ; securities market; SEQUENCE trading system; SETS; Stock Exchange Automated Quotations; Stock Exchange Trading Service; Stock Management for Jobbers; TALISMAN; TAURUS; traded options market; Transfer Accounting and Lodgement for Investors; Transfer and Automated Registration of Uncertificated Stock; Unlisted Securities Market; USM

Chapter.  28870 words. 

Subjects: Economic History

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