The FTSE 100 (pronounced as “footsie”) is an index that tracks the top 100 companies on the London Stock Exchange based on their market capitalization. It is also known as the FTSE 100 index, Financial Times Stock Exchange 100 Index, or simply FTSE.
History of the index
In 1984, the Financial Times Stock Exchange aimed to create an index that would be similar to indices in other countries. This index would allow traders to have a quick view of the performance of companies listed on the London Stock Exchange (LSE) at any given time.
Traders soon realized that the FTSE 100 (also known as UK100) could be traded as an instrument, just like shares or commodities. This made the index a well-known name, just like the S&P 500 (USA500), the Dow Jones Industrial Average (USA30-Wall Street), and other popularly traded indices.
How is it calculated?
The document with reference number FTSE100 follows a Float-Adjusted Market Capitalization system that was created through the joint efforts of the Financial Times and the London Stock Exchange.
The list features the top 100 companies traded on the LSE. They are ranked according to their total market capitalization, with only openly traded shares used to determine the valuation. This approach ensures that a company’s size is calculated based on the collective value of all its publicly traded shares, rather than just the number of available shares or trade volume. Every company on the list is assigned a weight, with values updated at the end of each trading day for the most up-to-date index.
Who is responsible for managing FTSE100?
The FTSE group, which manages several indices including FTSE100 and FTSE250, is owned by the London Stock Exchange Group (LSEG). The group is responsible for calculating and updating the daily valuation of the indices.
Additionally, the group meets quarterly to review the status of companies listed on the indices and discuss the eligibility of new companies that may be added to the listing.
FTSE100 trading hours
The value of the FTSE100 changes throughout the trading day as it lists the top 100 companies on the London Stock Exchange. However, official numbers are only published by the LSEG at the end of each day.
The London Stock Exchange is open from 8:00 AM to 4:30 PM London time on weekdays, excluding weekends and holidays.
The FTSE100 is a well-known benchmark index that global traders rely on. Following this key index gives an insight into the British economy and global markets as a whole. Traders can also speculate on the UK, US, and global economy as a whole by using the USA500.