IN 1986, we saw our way of life on the floor of the stock exchange coming to an end. How would we respond, off the floor, sitting behind screens?
We’d had a while to realise how things would change as we already had SEAQ in play on screens so we were experiencing a mixture. We and Smith Brothers remained alone on the stock exchange floor, the thought being that, as many stockbrokers operated from dealing boxes around the market, we would capture the lions’ share of the trades. It only took a couple of weeks to realise that we were wrong, the machines had taken over. With our tail between our legs we retreated to our offices and joined the battle – and how business took off. From an average of 20,000 bargains a day to hundreds of thousands today.
AFTER THE RULE BOOK
The rule book had been ruled out of order and the separation of capacities was a thing of the past. Huge mergers came about. The flagship for the UK, or so we thought, would be the mighty Warburgs who incorporated the blueblood stockbrokers Rowe & Pitman and the pre-eminent gilt jobbers Akroyd and Smithers.
Regrettably this flagship got overtaken by the Americans. However, everybody scrambled to find a partner. Lots of broking firms were incorporated into bigger firms and became integrated houses – both broker and market maker but with Chinese walls in place. One wonders, and I still do, whether these walls were solid enough.
We chose to stick to our last and although we did get taken over by County NatWest we remained a jobber. The other arm to County was Fielding Newson Smith, a broker. We continue to remain, in the main, a jobber under the umbrella of our present parent Close Brothers.
Life went on, people and firms made a lot of money, dealers overnight became rocket scientists commanding huge salaries. The whole thing got out of hand and, in fact, for many ended in tears and huge losses.
Now the economic scene has deteriorated so the City is going through another evolving moment. We will come out the other end fitter and stronger, I believe, but a lot slimmer. Do we like where we’ve got to? Well it’s not as much fun as it was, it’s certainly not as personable. What really matters is that the City of London remains the Wimbledon of financial services.
The public might resent what people get paid in the City and the financial services industry but if they do a good job, create jobs for people and also input a huge part of our GDP, which they do, then why not pay them handsomely? Nobody seems to care what promoters of reality shows earn or, come to that, footballers, whose clubs rip off the public with their ever-changing strips.
So what is missing from our City? A stock exchange museum. This will not only show the public the value of capitalism but also its unacceptable face. Watch this space – I’m working on it.
Brian Winterflood began his City career in 1953. He is life president of Winterflood Securities.