Recently there has been quite a bit written about the crash of ’87 it being the 30th anniversary and everything, so we feel a few facts need to be straightened out.
A lot of people do not realise how much the storm of 1987 actually impacted upon events as the Friday before virtually no one could actually get in to work. I did manage to make it after a two-hour trek but as I was in a definite minority and as everything was still face to face in those days there was little point.
This may sound inconsequential but it was the October expiry that day, and back then it was all done between 10 and half past when baskets were traded as all the positions were unwound.
So, to us the true anniversary is the Monday after expiry, which is today.
Of course, the market was rampant then and being mainly equity fuelled this was not a good time in the relatively brand new derivatives industry.
This left a lot of people guessing and unsure of what their exposure was as it hadn’t been closed or rolled so naturally there was a degree of overcompensation.
And the first chance people had is what most people read about now and as ever in these situations it quickly got out of control.
It may have happened on the Monday but the die was cast on the Friday.