London Stock Exchange - Explained
What is the London Stock Exchange?
Written by J. Mance Gordon
Updated at April 22nd, 2024
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What is the London Stock Exchange?
The London Stock Exchange (LSE), started more than 300 years ago, is based on the Antwerp Bourse's model. In 1571, Queen Elizabeth I of England officially opened this exchange. In October 2007, a successful merge happened between Milan Stock Exchange (Borsa Italiana) and the London Stock Exchange which led to the creation of the London Stock Exchange Group. Currently, The London Stock Exchange is the biggest stock exchange in both the UK and Europe.
How Does the London Stock Exchange Work?
Some of the securities traded in the London Stock Exchange include Common stock, derivatives, bonds, debt securities, exchange-traded funds, gilt-edged securities, covered warrants, structured products, global depository receipts etc. The London Stock Exchange has two major markets used by companies to trade.
- The main market- This market is used by more than a thousand big corporations which are established in numerous countries around the world. Over the years, companies in this market have raised hundreds of billions of pounds through new and further issues. This market has an FTSE 100 index which is made up of the main share index of 100 listed UK companies which have the highest capitalization.
- Alternative Investment Market- This is an international market for smaller companies which are looking for growth capital. These companies may be venture capital-backed, early stage or more established. This market is designed to be flexible with an easy admission process for new companies that require to be publicly listed since it is classified as a Multilateral Trading Facility.
The LSE uses a trading platform called Millennium Exchange which is Linux-based. It currently traded by hundreds of international companies from around the world.