London stock market
The London Stock Market is centred on the vast London Stock Exchange (abbreviated LSE), one of the biggest stock exchanges in the world. Founded in 1801, the London Stock Exchange currently lists around 2,750 companies in the United Kingdom as well as overseas. The London Stock Exchange, and consequently the heart of the London stock market, can be found in Paternoster Square, close to St Paul's Cathedral in central London.
The London Stock Exchange is a public company consisting of three different parts: the Main Market, the Alternative Investments Market (AIM) and the EDX London (which focuses on derivatives). The independent FTSE Group keeps a series of difference indices in order to measure the London Stock Exchange, such as the FTSE 100 Index, the FTSE 250 Index and the FTSE 350 Index.
The London Stock Market and the London Stock Exchange Alliances
The London Stock Market has entered into several notable alliances that are noteworthy for anyone with an interest in the London stock market. In 2007, the exchange decided to take over the Borsa Italiana, which is Milan-based, for 1.6 billion Euros (equivalent of roughly (£1.1 billon or US$ 2 billion). This purchase does however remain subject to approval by the shareholders of the London Stock Exchange.
The London Stock Exchange has also announced its intention of creating a Euro-Asian Gateway for derivatives and securities. It is currently collaborating with the Singapore Exchange.
The History of the London stock market
The trade in shares in London can be traced back to the need to finance merchant journeys, specifically the East India Company expedition to India and the Far East and the Muscovy Company's endeavour to travel to China through the White Sea north of Russia. Such expeditions were naturally both risky and expensive and money was raised by selling shares to interested merchants. If the expeditions were successful, each merchant would receive a portion of the profits.
The idea soon grew popular in the United Kingdom and the London Stock Market was a fact. By 1695, there were around 140 joint-stock companies in the country and the trade was concentrated to two coffee shops in the City's Change Alley: Garraway's and Jonathan's. In these coffee-shops, a broker named John Castaing published the price of stocks (and also of various commodities) in his publication The Course of the Exchange and other things.
1697 is an important date in the history of the London stock market because this was the year when the first law to "restrain the number and ill-practice of brokers and stockjobbers" was passed. The law was the result of several market-rigging incidents and flourishing insider trading. After 1697, all brokers active on the London stock market had to be licensed and they were also required to take an oath where they promised to act in accordance with the law.
The London stock market saw one of its first major set-backs in 1720 when a bubble burst. The centre of this bubble was an unprofitable enterprise under the name The South Sea Company. The South Sea Company had been set up by the government, and the bubble was chiefly caused by group effort from the government, the company owner John Blunt and several London stock market brokers.
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