The City of London is often considered to be the same as London, the capital city of Great Britain. But what if I told you it was a small area of about 1 square mile (or 2.9 square kilometers) and has a population of only 7,000 people?
Yes it is true, the City (as we call it) is a city within a city. It was originally Londinium, a Roman city established in the 1st Century AD (although people have lived on the banks of the Thames for thousands of years). Today the City (note we use a capital ‘C’ to denote the proper name) is the centre of the financial services industry.
It is often referred to as the ‘square mile’, a reference to its small size. Over 400,000 people commute there every day.
But enough of history, what is it like to work there? I arrived in London at the end of 1986, just 2 months after ‘Big Bang’. This wasn’t a large explosion, instead it was the de-regulation of the markets that abolished fixed commissions and share trading moved onto an electronic platform. This may seem like an obvious move (or ‘’no-brainer’ as some people say), but this was a time before mobile phones, tablets, laptops, PC and even the INTERNET! How did we survive in those dark ages?
At the time traditional stockbrokers were concerned that Big Bang would be bad for London, but in the last 29 years the City has become one of the largest financial services centers in the world. A large part of this is due to the deregulation of 1986.
I still remember the feeling of awe when I walked onto a trading floor for the first time at a stockbroker called Smith New Court (or Smiths as we liked to call it). It was a fairly small floor with about 100 people, but you could feel the tension in the air. There was a huge whiteboard in the middle of the floor and around it were standing 6 senior executives looking very concerned. There were lots of numbers written on the board – 10,000, 250,000, 45,000. What was going on?
I had walked onto the floor at a time when Smiths had underwritten (guaranteed) to sell over £300m worth of shares in a company that was listing on the stock exchange that day. If this trade went wrong then Smiths would have to buy the shares with their own money. This was in the early 90’s so £300m was a huge sum and in fact more than the total value of Smith New Court. The company had bet its entire value on the deal and if this went badly the company could have gone bust.
Most of the 100 traders were standing up, either shouting at each other or shouting into their phones. Some had two phones that they seemed to be speaking into at the same time. A small team of about 10 people were running between the desks collecting tickets (paper forms) with the individual trades on them. These were added to the list on the whiteboard which was counting down the shares we had to sell.
As the morning passed the action became more frantic until just before lunch someone shouted “all done”. The whole floor erupted into cheers, people were hugging each other and jumping up and down. They had done it and made millions in just one day’s trading. I can’t really remember the rest of that day as the executives sent down cases of champagne to the floor and we partied for the rest of the day and late into the night.
What happened to Smith New Court? Well they no longer exist. They were bought by US investment bank Merrill Lynch in 1995. Unfortunately trading floors have become quieter places with most trading down automatically using computers. So the days of running around and shouting have gone, but I still think of those days with great fondness.