YOUR BUSINESS IS OUR BUSINESS : Remember Britain’s markets ‘Big Bang’?

Exactly 30 years to the day today is like so much water under the proverbial bridge, counting from when the British Government suddenly deregulated its financial markets on October 27, 1986. The event was to become known as the ‘Big Bang!’

This was in reference to the ‘Big Bang Theory’ in Astronomy – as opposed to the ‘Steady State Theory.’ The former is speculates that the Univesre originated billions of years ago from the explosion of a single mass of material – and that the ‘pieces’ therefrom are still flying apart today...’ Sheesh!

Back to the British Financial Big Bang... Britain deregulated its financial markets, leading to restructuring of the way those markets operate!

Perhaps as the Sisters of Fate would’ve it, a little more than a decade down the Financial Road, an economic minicrash took place (also) on an Oct. 27 (but, in 1997), when stock markets around the world crashed – largely from fears of a global economic meltdown.

In the event, for example, the legendary Dow Jones Industrial Average plummetted 554.26 points, falling to 7,161.15! The ‘Dow Jones Industrial Average’ is, of course, a measure of stock market prices based on 30 leading companies listed on the New York Stock Exchane (NYSE) in the US.

But, that’s another story...

As already noted, Britain’s financial markets deregulation a generation ago was followed a decade later – Oct. 27, 1997 – by the global economic minicrash that played havoc with national economies on Planet Earth this side of Heaven.

Even Tanzania was dragged into that financial Black Hole, forcing the Govt. to undertake various measures especially in the Financial Markets stakes.

For instance, President Ally Hassan Mwinyi of the Second Phase Government (1985-95) was cornered by force of circumstances into embarking upon economic liberalisation, beginning in the late 1980s. Some of the milestones in the country’s financial markets included the Foreign Exchange Act, enacted in March 1992. The Act liberalized external trade, and created an enabling environment for market-determined exchange rates.

In January 1994, the Mwinyi Govt. enacted the Capital Markets & Securities Act – followed in June that year by the Interbank Foreign Exchange Market (IFEM). IFEM is a wholesale market which facilitates determination of the exchange rate, replacing the weekly foreign exchange auction system.

Fast-Forward to May 2003, when the Third Phase Govt. of President Benjamin Mkapa (1995-2005) opened up for business the Dar es Salaam Stock Exchange to foreign investors. (DSE was statutory provided for in Sept. 1996). Also, several regulations were published in 2003 to guide foreign investors dealings in the Stock Exchange, and establish regulatory safeguards for orderly, stable market activities...

Oh, it’s a long, interesting story... But, exactly what are financial markets, a colleague at the next work-station asks!

Well, very briefly, the term describes a platform that facilitates prospective sellers and buyers of assets such as equities, bonds, currencies and derivatives. Generally, financial markets are regulated as to their trading activities, complete with transparent pricing (or so we’re told!) – with market forces determining prices of the securities that’re traded! Really...?

There seemingly are a bazillion financial markets in national Economies worldwide: Capital markets; Stock markets; Bond markets, Money markets, Derivatives markets, Cash or Spot markets; Forex and Interbank markets; Primary markets; Secondary markets; Over-the-Counter (OTC) markets; Third and Fourth Markets, etc, etc...

Suffice it here to say that financial markets play crucial roles, each in its own way, in a nation’s economic daily life. For that, they must be regulated in one form or another – and to one degree or another...

Britain had its Financial Markets Big Bang on today’s date in 1986 when, among other things, the Govt. of Premier Margaret ‘Iron Lady’ Thatcher dramatically deregulated that economic sub-sector.

Could it be said in the same breath that Tanzania also had its Big Bang in 1994 when it introduced the Capital Markets & Securities Act, the Interbank Foreign Exchange Market, etc?

What do you say to that? Cheers!