London Stock Exchange
Founding of the London Stock Exchange
While the London Stock Exchange was officially founded in 1801, organized trading in England can be traced back to 1571 when Elizabeth I opened the Royal Exchange. Stockbrokers were not allowed into the Exchange during the 17th century and so they went to other locations such as Jonathan's Coffee-House where they would trade commodities. In 1697 Parliament started to regulate the stock market more which led to traders leaving and going onto the streets to conduct transactions.
Trade at Jonathan's Coffee-House became active again after the Seven Years War and in 1773, 150 brokers organized a club which led to the formation of a more formal stock exchange in Sweeting's Alley. Fraud was prevalent which led to increased fees before it finally became the London Stock Exchange, London's first regulated exchange, in 1801.
Foundation for Trading
The exchange lacked set rules which led to minor problems in the early years. The General Purpose Committee created a comprehensive document in 1812 which became the foundation for trading. By the mid-1800s there were so many brokers and members that a new building, with twice the floor space, was completed in 1854.
By the First World War, London and the stock exchange were the financial center of the world but the exchange was closed for five months at the end of 1914 due to rising prices and fear that foreign banks would want their money and interest paid back. During the next three years, nearly 1000 members left the LSE due to new restrictions and challenges that traders faced as a result of the war. By the end of the war, trading returned to normal. The Second World War caused fears but the exchange was closed for only six days.
Stock Exchange Tower
Trading was booming by the mid-1900s and a new Stock Exchange Tower was built and completed in 1972. The following year, two trading prohibitions were done away with; both women and foreign-born members were allowed on the floor and the LSE formally amalgamated with eleven regional British and Irish exchanges.
The largest change of the 80s was the deregulation of the UK's financial markets in 1986. In 1991 the Council of Exchange was replaced by a Board of Directors and the exchange formally adapted the name 'The London Stock Exchange.' The Alternative Investment Market was launched in 1995 so that companies could take advantage of expanding international markets. In 1997 the Electronic Trading Service began operating to bring greater speed and efficiency to the exchange.
Becoming a Public Limited Company
Exchange shareholders voted, in 2000, for the LSE to become a public limited company. In 2003, the LSE acquired Proquote Limited. A merger with Borsa Italiana in 2007 created the London Stock Exchange Group which currently operates from the headquarters in Paternoster Square. The London Stock Exchange is the fourth largest exchange in the world and the largest in all of Europe. There are over 2,966 companies listed on the LSE.
There are five major indices on the LSE: the FTSE 100 Index, the FTSE 250 Index, the FTSE 350 Index, the FTSE SmallCap Index and the FTSE All-Share Index. Within these, a vast variety of stocks, spanning all industries, are offered to buyers. The Main Market includes over 1300 of the world's largest companies from 60 different countries. The Alternative Investment Market is specifically for smaller companies that are growing and want to have access to growth capital.
While the LSE represents a large number of companies, both domestic and international, some of the notable names in the top 100 include BP Oil, Royal Dutch Shell, Barclays, Burberry Group, Prudential, HSBC, Rolls-Royce Group, Unilever and Experian.
Though it's comes in forth, behind the New York Stock Exchange, the NASDAQ, and the Tokyo Stock Exchange, the LSE is still an important player in the world economy. It offers more emerging markets ETFs than any of the worlds other exchanges. It also is the largest stock exchange in Europe and so the economy of the entire continent plays a role in the exchange.
London's Financial Industry
London's Financial industry is largely focused within the City of London, often referred to as the "City" or the Square Mile. A number of financial institutions, including Lloyds of London, have headquarters or offices in the Chancery Lane and Temple areas along with Liverpool Street. Canary Wharf has also been developed into a financial center within the London area.