significant change, often as a result of legal or regulatory changes. The term
has acquired many different uses in the financial markets. For example, in the
U.S., a Big Bang occurred in 1975 when stockbrokers stopped receiving fixed
commissions, which opened the way for the first discount brokerage firms to set
up business. As investment banks earned smaller trading commissions, they began
to look for other ways to generate income to support trading-related services,
such as research. Investment banking revenues replaced trading commissions as a
way to pay for research analysts,
so analysts began working more closely with each other. The Big Bang reached a
crescendo during the 1990s as the stock market reached historic highs. After
the stock market began to fall sharply in the first half of 2000,
investigations by regulators and legal authorities put a damper on the close
working relationship as they alleged conflicts of interest.
In the U.K., Big Bang refers
to the deregulation of the financial markets that occurred in 1987 and 1988,
when a series of reforms of the London Stock Exchange were implemented; these
reforms allowed investors to trade without going through market makers, or companies that were given exclusive rights to trade
stocks on the exchange. The reforms also allowed financial institutions to
expand into many different areas of financial services so that customers could
deal with one bank for various investment purposes instead of dealing with
several. Japan experienced a Big Bang when the foreign exchange market was
deregulated in 1998.
The date, October 27, 1986, on which the London security markets were significantly deregulated. The deregulation eliminated fixed commissions on security trades and put an end to the prohibition against securities firms acting as brokers and dealers.
The explosion of an extremely small, hot, and dense body of matter that, according to some cosmological theories, gave rise to the universe between 12 and 20 billion years ago. Compare big crunch, steady state theory. See also open universe.
A Closer Look In the 1920s astronomer Edwin Hubble discovered that wherever one looked in space, distant galaxies were rapidly moving away from Earth, and the more distant the galaxy the greater its speed. Through this observation he determined that the universe was becoming larger. Hubble also found that the ratio between a galaxy's distance and velocity (speed and direction of travel) was constant; this value is called the Hubble constant. By calculating the distance and velocity of various galaxies and working backward, astronomers could determine how long ago the expansion began—in other words, the age of the universe. The figure, which scientists are constantly refining, is currently thought to be between 12 and 20 billion years. According to the widely accepted theory of the big bang, the universe was originally smaller than a dime and almost infinitely dense. A massive explosion, which kicked off the expansion, was the origin of all known space, matter, energy, and time. Scientists are also attempting to calculate how much mass the universe contains in order to predict its future. If there is enough mass, the gravity attracting all its pieces to each other will eventually stop the expansion and pull the universe back together in a big crunch. There may not be enough mass, however, to result in an eventual collapse. If that is the case, then the universe will expand forever, and all galaxies and matter will drift apart, eventually becoming dark and cold.