Just after 8 am, a man with an Irish accent, using a new codeword, telephoned a series of eight warnings of a bomb in the Exchange to London offices.
The device exploded at 8.49 am, destroying the public gallery and putting the London Traded Options Market out of operation until Monday. The building had been evacuated in time and no one was injured.
Stock market dealings were computerised in October 1987 in an operation known as Big Bang and the majority of trading in the City was not affected. Office workers were later evacuated from several City security firms following hoax warnings of other bombs.
The device was estimated by Commander George Churchill-Coleman, head of the Anti-Terrorist Branch, to have contained between five and 10 lbs of high explosive. It was believed to have been planted either that morning or days earlier, using a timer in the mens' toilets behind the public viewing area. The attack was assumed by the police to be the work of the IRA . It is believed to be the first time a warning had been given in Britain since the Harrods blast in 1983.
Last month, the IRA claimed responsibility for demolishing the entrance of the Carlton Club in St James's Street, in the West End of London, and badly damaging the former home of Lord McAlpine, the ex-treasurer of the Conservative Party, in West Green, Hampshire. Earlier in the year a string of attacks on military targets killed three soldiers.
The recent shift from military sites to targets said to represent the establishment was a search for greater publicity, Mr Churchill-Coleman suggested. 'It does not suprise us that they are now moving away from military targets to softer ones.'
A Scotland Yard press conference after the explosion was used to launch a new police anti-terrorist initiative. Posters advertising a new free telephone number (0800-789321) are to be sent out in the next few weeks. A similar approach, using a confidential hotline, has been in operation for a long time in Northern Ireland.
Mr Churchill-Coleman said: 'We need the vigilance of the general public. Somewhere, there's somebody who knows these individuals. They may be renting accommodation for cash, there may be possibly one or two men and a female.'
Andrew Hugh Smith, the chairman of the Stock Exchange, suggested that an IRA member may have joined a touring group. 'I shudder to think what the consequences would have been had the security forces not reacted as fast as they did to the warning,' he said. Around 300 people were evacuated, though many ignored alarms at first, believing it was fire drill.
The warning calls, which did not give the precise location of the bomb, were made to, among others, Reuters news agency, the Financial Times, the Salvation Army and the City Police.