LONDON — Flying in to London City airport, the view out the window is of the gleaming glass towers of Canary Wharf — a mini-city on the eastern edge of the British capital that has become the most vibrant financial centre in Europe.Just two decades ago, the same area was a vast expanse of wasteland and disused docks backing on to the River Thames, and the construction of the airport catering to business commuters had barely begun.

The regeneration of the docklands is the most visible result of the so-called Big Bang — the overnight deregulation of the London Stock Exchange, which celebrated its 20th anniversary on Friday.

Big Bang transformed the British financial system by flinging open the doors of the exchange — once the preserve of the rich or well-connected — making it cheaper, faster and more transparent for foreigners and individuals to invest.

“Following Big Bang, there was a great movement of international business into the UK market,” said Peter Thomson, chief executive of investment firm Taylor Young Investment Management. “This set London up and stabilised it as a financial centre worldwide.”

Named after the theory of the universe due to its sudden and explosive introduction, Big Bang heralded an age of fierce competition that brought the cost of trading down and made it viable for private and international investors.

Without Big Bang, it is impossible to see how the London exchange would have become the crown jewel of bourses it is today — the most desired, but not yet captured, target in a recent flurry of cross-border exchange offers.

Before Oct. 27, 1986, all exchange trading took place on the trading floor in Throgmorton Street, a noisy and bustling place where investors’ orders had to be phoned down by brokers from their offices to boxes. These were rooms alongside the trading areas where dealers went to “jobbers” — the middlemen — to ask for a quote, a buying or selling price. Jobbers became known as market-makers.

Big Bang scrapped the distinction between jobbers and brokers, significantly cutting the red tape involved in making an investment. The fixed scale of commission paid by investors to stockbrokers was also abolished, meaning commissions fell from an average of 2 percent to as little as 0.2 percent.

The structure of the market was completely altered, with the biggest physical change being the move from open outcry to electronic, screen-based trading. That made transactions much cheaper and swifter, leading to rapid growth in business on the exchange.

“Looking at the dramatic expansion it enabled in our business, Big Bang feels like a hundred years ago, not twenty years ago,” said Charlotte Black, corporate affairs director at brokers Brewin Dolphin Securities.

“In the old days, when we wanted to get a quote for a client it triggered a long chain of activity; we would call the exchange, who looked for a jobber, who went into the pit to get a quote so that we could call the client back,” she said.

“After Big Bang that quote could be given almost instantly, and the cost of execution-only trading for a private client was reduced by as much as 75 percent.”

Big Bang had its genesis in the election of Margaret Thatcher as prime minister in 1979. One of her first acts was to abolish money exchange controls, paving the way for foreign banks to compete with their British rivals and with the stock market as it enabled money to move freely in and out of Britain.

Following the 1983 general election, trade and industry secretary Cecil Parkinson and London Stock Exchange chairman Nicholas Goodison agreed to make changes at the bourse.

Douglas McWilliams, an economist at the Center for Economics and Business Research, recalls Thatcher “turning on her charm” to persuade Goodison of the benefits of Big Bang.

“As he shrank back further and further into the Downing Street sofa, he clearly felt that it would be better to accept the icy winds of competition from the Big Bang than risk the wrath of the redoubtable Lady Thatcher,” McWilliams said.

Thatcher won out and the reforms went through, leading to a rash of international acquisitions of British financial firms and the arrival of bankers from New York, Frankfurt, Paris and Tokyo.

London as a financial centre flourished, resulting in today’s multinational corporation towers at Canary Wharf and new entrants in the “City of London,” the area that was home to the open outcry exchange.

There are now around 300 foreign banks that have offices in London and more than 350 foreign companies are listed on the London Stock Exchange — the bourse drew more initial public offerings than the New York Stock Exchange this year.

In trading terms, more than 70 percent of Eurobonds are traded in London, while foreign exchange turnover in the city in 2004 was $753 billion a day — around 31 percent of the global share.

Yet there was a note of caution in the anniversary celebrations.

Michael Snyder, chair of the City of London’s policy and resources committee, voiced commonly held fears about the prospect of excessive financial regulations turning away international business.

“Reducing the tax and bureaucratic burden ... are investments in prosperity which will bring strong returns,” Snyder said.

Another concern is London’s ageing infrastructure, particularly its transport system. The government is yet to commit full financing to “Crossrail” — a proposal to build a railway network that will run from Heathrow to the centre of London via the two financial hubs — by 2015.

“Staying ahead of world competition in this industry is tough, and will get tougher,” said David Brewer, Lord Mayor of the City of London. “The City needs the support of all parties if it is to maintain its undoubted success.”