London Stock Exchange: Difference between revisions
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The London Stock Exchange has four core areas: |
The London Stock Exchange has four core areas: |
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''''Equity markets''''- enables companies from around the world to raise capital. There are four primary markets; Main Market, [[Alternative Investment Market]] (AIM), Professional Securities Market (PSM) and Specialist Fund Market (SFM). |
'''''Equity markets'''''- enables companies from around the world to raise capital. There are four primary markets; Main Market, [[Alternative Investment Market]] (AIM), Professional Securities Market (PSM) and Specialist Fund Market (SFM). |
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Revision as of 10:16, 19 August 2010
| File:London Stock Exchange Logo.svg | |
| Type | Stock Exchange |
|---|---|
| Location | London, United Kingdom |
| Coordinates | 51°30′54″N 0°05′56.5″W / 51.51500°N 0.099028°W |
| Founded | 1801 |
| Owner | London Stock Exchange Group |
| Key people | Christopher S. Gibson-Smith, (Chairman) Xavier Rolet, (CEO) |
| Currency | GBX |
| No. of listings | 3,000[1] |
| Market cap | US$2.4 trillion (June 2010) |
| Indices | FTSE 100 Index FTSE 250 Index FTSE 350 Index FTSE SmallCap Index FTSE All-Share Index |
| Website | londonstockexchange.com |
The London Stock Exchange is a stock exchange located in London, United Kingdom. As of end-June 2010, the exchange had a market capitalisation of US$2.4 trillion, making it the fourth largest stock exchange in the world and the largest in Europe.[2]
The exchange was founded in 1801 and its current premises are situated in Paternoster Square close to St Paul's Cathedral in the City of London. The exchange is part of the London Stock Exchange Group.
About the Exchange
Origin of share trading
The trade in shares in London began with the need to finance two voyages: The Muscovy Company's attempt to reach China via the White Sea north of Russia, and the East India Company voyage to India and the east. The trading in the stocks of the second company began in 1688.
Unable to finance these expensive journeys privately, the companies raised the money by selling shares to merchants, giving them a right to a portion of any profits eventually made.
Exchange
The idea soon caught on (one of the earliest was the Earl of Bedford's scheme to drain The Fens). It is estimated that by 1695, there were 140 joint-stock companies. The trade in shares was centred around the City's Change Alley in two coffee shops: Garraway's and Jonathan's. The broker, John Castaing, published the prices of stocks and commodities called The Course of the Exchange and other things in these coffee shops.
Licensing of brokers
In 1697, a law was passed to "restrain the number and ill-practice of brokers and stockjobbers" following a number of insider trading and market-rigging incidents. It required all brokers to be licensed and to take an oath promising to act lawfully.
The South Sea Bubble
The Change Alley exchange thrived. However, it suffered a setback in 1720.
Much excitement was caused by the South Sea Company, stoked by brokers, the company's owner John Blunt and the government. Having set up the unprofitable company nine years previously, the government hoped to wipe out the large debts accumulated by offering shares to the public.
Shares in the company, which had started at £128 each at the start of the year, were soon fetching as much as £1,050 by June. The bubble inevitably burst, with share prices plunging to £175, then £124.
The incident caused outcry, forcing the government to pass legislation to prevent another bubble, and it took a long time for the stock exchange to recover.
Coat of Arms
The Exchange received its own Coat of Arms in 1923. Its motto is dictum meum pactum, "My word is my bond".[3]
Location
Threadneedle Street and Capel Court
Jonathan's burnt down in 1748, and this, plus dissatisfaction with the overcrowding in the Alley, made the brokers build a New Jonathan's on Threadneedle Street, as well as charging an entrance fee. The building was soon renamed the Stock Exchange, only to be renamed again as the Stock Subscription Room in 1801, with new membership regulations.
However, this too proved unsatisfactory, and the exchange moved to the newly built Capel Court in the same year. The exchange had recovered by the 1820s, bolstered by the growth of the railways, canals, mining and insurance industries (there were, however, problems with stags and dividend payments). Regional stock exchanges were formed across the UK. Bonds (or gilt-edged securities) also began to be traded.
The London Stock Exchange Tower
The former Stock Exchange Tower, based in Threadneedle Street/Old Broad Street was opened by Queen Elizabeth II in 1972 and housed the Trading Floor where traders would traditionally meet to conduct business.
This became largely redundant with the advent of the Big Bang on 27 October 1986, which deregulated many of the Stock Exchange's activities. It eliminated fixed commissions on security trades and allowed securities firms to act as brokers and dealers. It also enabled an increased use of computerised systems that allowed dealing rooms to take precedence over face to face trading.
Paternoster Square
In July 2004, the London Stock Exchange moved from Threadneedle Street to Paternoster Square (EC4) close to St Paul's Cathedral, still within the "Square Mile" (the City of London).
It was officially opened by Queen Elizabeth II once again, accompanied by The Duke of Edinburgh, on 27 July 2004.
Pursuit of LSE by prospective merger partners
Nasdaq
In December 2005, the London Stock Exchange rejected a £1.6 billion takeover offer from Macquarie Bank. The London Stock Exchange described the offer as "derisory", a sentiment echoed by shareholders in the exchange. Shortly after Macquarie withdrew its offer, the LSE received an unsolicited approach from NASDAQ valuing the company at £2.4 billion. This too it rejected. NASDAQ later pulled its bid, and less than two weeks later on 11 April 2006, struck a deal with LSE's largest shareholder, Ameriprise Financial's Threadneedle Asset Management unit, to acquire all of that firm's stake, consisting of 35.4 million shares, at £11.75 per share.[4] NASDAQ also purchased 2.69 million additional shares, resulting in a total stake of 15%. While the seller of those shares was undisclosed, it occurred simultaneously with a sale by Scottish Widows of 2.69 million shares.[5] The move was seen as an effort to force LSE to the negotiating table, as well as to limit the Exchange's strategic flexibility.[6]
Subsequent purchases increased NASDAQ's stake to 25.1%, holding off competing bids for several months.[7][8][9] United Kingdom financial rules required that NASDAQ wait for a period of time before renewing its effort. On 20 November 2006, within a month or two of the expiration of this period, NASDAQ increased its stake to 28.75% and launched a hostile offer at the minimum permitted bid of £12.43 per share, which was the highest NASDAQ had paid on the open market for its existing shares.[10] The LSE immediately rejected this bid, stating that it "substantially undervalues" the company.[11]
NASDAQ revised its offer (characterized as an "unsolicited" bid, rather than a "hostile takeover attempt") on 12 December 2006, indicating that it would be able to complete the deal with 50% (plus one share) of LSE's stock, rather than the 90% it had been seeking. The U.S. exchange did not, however, raise its bid. Many hedge funds had accumulated large positions within the LSE, and many managers of those funds, as well as Furse, indicated that the bid was still not satisfactory. NASDAQ's bid was made more difficult because it had described its offer as "final", which, under British bidding rules, restricted their ability to raise its offer except under certain circumstances.
In the end, NASDAQ's offer was roundly rejected by LSE shareholders. Having received acceptances of only 0.41% of rest of the register by the deadline on 10 February 2007, Nasdaq's offer duly lapsed.[12] Responding to the news, Chris Gibson-Smith, the LSE's chairman, said: "The Exchange’s strategy has produced outstanding results for shareholders by facilitating a structural shift in volume growth in an increasingly international market at the centre of the world’s equity flows. The Exchange intends to build on its exceptionally valuable brand by progressing various competitive, collaborative and strategic opportunities, thereby reinforcing its uniquely powerful position in a fast evolving global sector."[13]
On 20 August 2007, NASDAQ announced that it was abandoning its plan to take over the LSE and subsequently look for options to divest its 31% (61.3 million shares) shareholding in the company in light of its failed takeover attempt.[14] In September 2007, NASDAQ agreed to sell the majority of its shares to Borse Dubai, leaving the United Arab Emirates-based exchange with 28% of the LSE.[15]
Products & Services
The London Stock Exchange has four core areas:
Equity markets- enables companies from around the world to raise capital. There are four primary markets; Main Market, Alternative Investment Market (AIM), Professional Securities Market (PSM) and Specialist Fund Market (SFM).
As successful companies expand in today's global market place, they need capital to fund their growth. A listing on the Exchange’s Main Market enables companies to access Europe's deepest pool of capital and gain the key benefits of higher profile and liquidity. Underpinned by London’s balanced and globally-respected standards of regulation and corporate governance, the Main Market represents a badge of quality for every company listed and traded on it and an aspiration for many companies worldwide. It offers the lowest cost of capital to issuers.
The Main Market is the destination of choice for the world’s leading companies for a flotation or when raising further capital - a listing on the Main Market represents an aspiration for many companies. In general, the Main Market suits ambitious and more mature companies that are confident that they can exploit the benefits the Main Market offers, and meet its high standards of disclosure, governance and regulation.
The market is truly global, with companies traded on it attracting keen attention from internationally focused investors in the UK and around the world.
The Main Market offers companies: -access to a robust, real-time share price providing the issuer's market valuation through leading edge trading services -access to deep pools of capital -benchmarking through the FTSE UK Index Series -high profile through media coverage, investment research and announcements -the Exchange’s portfolio of products and services and continuing efforts to maximise market efficiency.
AIM is the London Stock Exchange’s international market for smaller growing companies. A wide range of businesses including early stage, venture capital backed as well as more established companies join AIM seeking access to growth capital. AIM offers smaller growing companies the benefits of a world-class public market within a regulatory environment designed specifically to meet their needs. AIM is renowned worldwide for its balanced approach to regulation which is uniquely suited to smaller companies. The AIM Rules are concise and principles based. Nomads are responsible for advising companies on the interpretation of and compliance with the rules.
PSM[20]
PSM is an innovative, specialised market designed to suit the specific needs of issuers. It facilitates the raising of capital through the issue of specialist debt securities or depositary receipts (DRs) to professional investors. Companies wishing to raise capital may do so without the additional cost of following a retail or equity regime. PSM is one of our suite of markets for issuers and is operated within the scope of our status as a Recognised Investment Exchange. The UK Listing Authority approves the listing particulars of issuers choosing to join the Professional Securities Market, and admits the securities to the Official List. Companies then apply to the Exchange for admission to trading.
SFM[21]
SFM is the London Stock Exchange’s regulated market for highly specialised investment entities that wish to target institutional, professional and highly knowledgeable investors only.
SFM further enhances London’s appeal to specialist investment managers seeking a flexible and adaptable route to accessing permanent capital from a highly sophisticated global investor base.
SFM appeals to variety of different types of investment managers, including those managing large hedge funds, private equity funds, and certain emerging market and specialist property funds, seeking admission to a public market in London.
Trading services - highly active market for trading in a range of securities, including UK and international equities, debt, covered warrants, exchange traded funds (ETFs), Exchange Traded Commodities (ETCs), reits, fixed interest, contracts for difference (CFDs) and depositary receipts.
Information Services - The London Stock Exchange provides real-time prices, news and other financial information to the global financial community.
Derivatives - A major contributor to derivatives business is EDX London, created in 2003 to bring the cash equity and derivatives markets closer together.
Technology
The original LSE trading platform, based on Microsoft's .NET framework, was developed by Microsoft and Accenture. Microsoft used the LSE software as an example of the supposed superiority of Windows over Linux in the "Get the Facts" campaign, claiming that the LSE system provided "five nines" reliability. For Microsoft, LSE was a good combination of a highly visible exchange and yet a relatively modest IT problem[22]. After suffering extended downtime[23][24] and unreliability the LSE announced in 2009 that it was planning to dump Microsoft and switch to Linux in 2010.[25][26]
Hours
Normal trading sessions are from 08:00 to 16:30 every day of the week except Saturdays, Sundays and holidays declared by the Exchange in advance.[27]
Levels
- Listed companies 2,747.
Split into:
- UK Main Market - 1120
- International Main Market - 315
- Alternative Investment Market (AIM) - 1253
- Professional Securities Market (PSM) - 44
- Specialist Fund Market (SFM) - 5
- Trading Only - 10
Source[1]
See also
- London Stock Exchange Group plc
- Exchange Alley
- Chi-X
- Borsa Italiana
- Market maker
- Alternative Investment Market
- List of stock exchanges
- Mandatory quote period
- PSQ Analytics
References
- ^ a b List of all companies on the London Stock Exchange (xls (Excel Spreadsheet)), londonstockexchange.com, 30 April 2010, retrieved 26 May 2010
- ^ "Market highlights for first half 2010" (PDF). World Federation of Exchanges. Retrieved 18 August 2010.
- ^ London Stock Exchange - Our history
- ^ Patrick, M. (2006-04-11). "Nasdaq Acquires 15% of LSE". The Wall Street Journal.
{{cite news}}: Unknown parameter|coauthors=ignored (|author=suggested) (help) - ^ "Scottish Widows says has sold 2.7 mln LSE shares at 1,175 pence". Forbes. 2006-04-12.
- ^ Ortega, E. (2006-04-11). "Nasdaq Buys 15 Percent Stake in LSE for $782 Million". Bloomberg News.
- ^ MacDonald, A. (2006-05-04). "In LSE Stakes, Nasdaq Advances, Euronext Falls". The Wall Street Journal.
{{cite news}}: Unknown parameter|coauthors=ignored (|author=suggested) (help) - ^ Lucchetti, A. (2006-05-11). "Nasdaq Lifts Its LSE Stake to 24%". The Wall Street Journal.
{{cite news}}: Unknown parameter|coauthors=ignored (|author=suggested) (help) - ^ Goldsmith, B. (2006-05-19). "Nasdaq raises LSE stake, making rival bids harder". Reuters.
{{cite news}}: Unknown parameter|coauthors=ignored (|author=suggested) (help) - ^ Lucchetti, A. (2006-11-20). "Nasdaq Makes Bid to Buy Rest of London Stock Exchange". The Wall Street Journal.
{{cite news}}: Unknown parameter|coauthors=ignored (|author=suggested) (help) - ^ "LSE rejects £2.7bn Nasdaq offer". BBC News. 2006-11-20.
- ^ http://www.londonstockexchange.com/LSECWS/IFSPages/MarketNewsPopup.aspx?id=1403962&source=RNS
- ^ "Statement re lapse of Nasdaq's offer". londonstockexchange.com. 2007-02-10.
- ^ "Sale Update". reuters.co.uk. 2007-08-20.
- ^ Magnusson, N. (2007-09-20). "Dubai to Buy Stakes in Nasdaq, LSE; Strikes OMX Deal". bloomberg.com.
{{cite news}}: Unknown parameter|coauthors=ignored (|author=suggested) (help) - ^ http://www.londonstockexchange.com/companies-and-advisors/main-market/companies/companies.htm
- ^ http://www.londonstockexchange.com/companies-and-advisors/main-market/main/market.htm
- ^ http://www.londonstockexchange.com/companies-and-advisors/aim/aim/aim.htm
- ^ http://www.londonstockexchange.com/companies-and-advisors/aim/for-companies/joining/aim.htm
- ^ http://www.londonstockexchange.com/companies-and-advisors/psm/about/psm-about.htm
- ^ http://www.londonstockexchange.com/companies-and-advisors/sfm/about/about-the-specialist-fund-market.htm
- ^ Ajay Shah (2009-07-04). "Microsoft inside the exchange". Blogspot.
- ^ Rowena Mason (2008-09-10). "Seven-hour LSE blackout caused by double glitch". The Telegraph.
- ^ "London Stock Exchange trading hit by technical glitch". BBC News. 2009-11-26.
- ^ David M. Williams (2009-10-08). "London Stock Exchange gets the facts and dumps Windows for Linux". ITWire.
- ^ "London Stock Exchange Rejects .NET For Open Source". Slashdot. 2009-10-06.
- ^ Market Hours, London Stock Exchange via Wikinvest
Further reading
- Michie, R. C. (1999). The London Stock Exchange: A History. Oxford: Oxford University Press. ISBN 0198295081.
{{cite book}}: Cite has empty unknown parameter:|coauthors=(help)
External links
