FTSE 100 Index

• 1. Introduction

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  The FTSE 100 Index, the United Kingdom's best known stock market gauge, very nearly launched under a different name. As late as the 10th of February 1984, four days before the launch, the London Stock Exchange still called its new creation the SE 100. That name cut the Financial Times out of the credit entirely, since the paper had not contributed to the index's construction. Only at the last moment did the Exchange recognise that having the Financial Times involved in the official launch carried real value. The index instead became the Financial Times Stock Exchange 100 Index, known ever since as the FTSE 100 or, informally, the Footsie. It would go on to track the 100 most highly capitalised companies on the London Stock Exchange. It replaced the Financial Times' own FT 30 as the market's headline number.

  But how did a dispute over branding turn into Britain's most watched financial figure? What crashes, political decisions and corporate exits have shaped that number since? And why does a rising Footsie not always mean a healthy UK economy?

• 2. A Contested Birth

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  On the 14th of February 1984, the London Stock Exchange unveiled the index to the public. The Exchange had built it to better reflect real trading activity than the older FT 30 could. It was designed to replace that index as the market's headline figure.

  In May 1984, the Exchange's own London Traded Options Market, known as LTOM, used the new index's real-time data to launch an options contract. The rival exchange LIFFE moved quickly to launch a competing futures contract of its own.

  In 1985, annual volume on the FTSE futures contract fell short of 89,000 lots. That was a fraction of the 15 million lots traded that year on the S&P 500 index contract in the United States.

  By 1986, Margaret Thatcher's sweeping financial deregulation reached a turning point known as the Big Bang. It coincided with the high-profile privatisations of index members British Telecom, British Gas and British Aerospace.

  Together, the new index, the privatisations, LIFFE's tradable derivatives and heavy promotion from the Financial Times reshaped the market's habits. The FTSE 100 became the most widely used gauge of whether British shares were rising or falling.

  The following year would test that reputation in the most dramatic way the young index had yet faced.

• 3. Crash and Consolidation

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  In 1987, the privatisation programme continued with British Airways and British Petroleum, and BP's sale concluded on the very day the market suffered Black Monday. Over those two days the index fell 21.73%, and one session still holds the record for the worst single-day return, a drop of 12.22%.

  Even as the index went into freefall, futures trading volume hit a record 9,111 contracts in a single day. That compared with an average of just 2,400 contracts traded per day in the week before the crash.

  By the spring of 1992, LTOM was sold to LIFFE for a nominal sum, folding all of the FTSE 100's derivatives onto a single exchange. Trading stayed almost entirely in institutional hands, since the electronic systems required were too costly for most retail investors to access. Even so, annual volumes for FTSE futures and options contracts hit new highs that year, reaching 2.6 million and 2.2 million respectively.

  That autumn, the Bank of England, directed by HM Treasury under John Major's government, failed to defend sterling within the European Exchange Rate Mechanism. The swift devaluation on Black Wednesday and Britain's exit from the ERM benefitted the index's globally trading constituents, as their exports suddenly became cheaper overnight. The index closed at 2,370.0 on the 15th of September 1992, and by the end of 1999 it had nearly tripled to 6,930.2.

  Within three years the index would give back much of that gain, closing 2002 at just 3,940.36.

• 4. What the Number Measures

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  Under its trading symbol UKX, the index is maintained by FTSE Russell, a wholly owned subsidiary of the London Stock Exchange Group. FTSE Russell itself began as a joint venture between the Financial Times and the London Stock Exchange. It calculates the index in real time, publishing a fresh value every second the market is open.

  The FTSE 100 tracks the largest 100 qualifying UK companies by full market value. That value is found by multiplying each company's share price by its total number of issued shares. Because the formula excludes dividend income, investors wanting to see both price moves and reinvested income instead use the FTSE 100 Total Return Index. Over the last four decades, the total return index has doubled almost five times. The plain FTSE 100, by comparison, has doubled only slightly more than three times.

  Many FTSE 100 constituents are internationally focused businesses, which makes the index a fairly weak gauge of the UK economy on its own. It also leaves the index sensitive to swings in the pound sterling's exchange rate. The FTSE 250 Index, which holds a smaller share of international firms, is considered a better read on the domestic economy. The FTSE All-Share Index is more comprehensive still, yet the FTSE 100 remains by far the most widely followed UK market indicator. Related benchmarks include the FTSE 250, made up of the next 250 largest companies, and the FTSE 350, which combines the 100 and the 250. The FTSE SmallCap Index and the FTSE Fledgling Index sit further down the scale, and the All-Share aggregates the 100, the 250 and the SmallCap together.

  The index is divided into 18 ICB Supersectors. Four of those, Banks, Health Care, Industrial Goods and Services, and Energy, each carry a market capitalisation exceeding £250 billion. Together those four account for roughly 54% of the index's total value. Three individual companies, AstraZeneca, HSBC and Shell, each carry a market cap above £200 billion, together making up about 26% of the index. Every calendar quarter the list of constituents is reviewed, and companies entering or exiting the index trigger a burst of rebalancing trades across the market.

  Those quarterly swaps feed directly into how each remaining constituent's weight in the index gets recalculated.

• 5. The Weighting Formula

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  Inside the FTSE 100, share prices are weighted by free-float capitalisation. Companies with more of their stock actually available to trade carry more influence than smaller, less liquid firms.

  The free float factor is the percentage of a company's issued shares that are readily available for trading. That figure is rounded up to the nearest multiple of 5%. Multiplying a company's market capitalisation by that free float adjustment factor produces its free-float capitalisation. The result deliberately excludes restricted stock, such as shares held by company insiders.

  As with any price index, the FTSE 100 is always changing, whether through a corporate action or a change in constituents. To keep pace with those changes, FTSE Russell applies a formula developed by Hermann Paasche, adjusting the index's divisor around each event. Because the index is always built on its previous value, not a fixed base, FTSE Russell chains each new calculation to the one before it. This method is known as the Chained Paasche Index.

  That continuity is also what underpins every futures and options contract written against the index.

• 6. Betting on the Footsie

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  Traders looking to bet on the index itself turn to futures contracts traded on ICE Futures Europe. That exchange was once known as the London International Financial Futures Exchange, or LIFFE.

  Each standard contract, listed under the symbol Z, is worth 10 GBP multiplied by the index's points. It moves in ticks of 0.5 points worth 5 GBP apiece, and carries a basis point value of 10.

  On the last trading day of each quarterly contract, an intraday auction of every FTSE 100 stock sets the final settlement price. That auction begins at 10:15 on the London Stock Exchange.

  Contracts like these are why traders track the index to the decimal point, chasing every new record it sets.

• 7. New Highs, Fewer Companies

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  In 2024, the London market saw its highest number of delistings since the 2008 financial crisis, when the index itself had plunged 31.33% to 4,434.17. Companies cited higher valuations and lower costs available by switching their listing to the New York Stock Exchange. Ashtead Group, CRH and Flutter alone represented almost £120 billion of FTSE 100 market capitalisation among the firms that left. Private equity takeovers thinned the pool of eligible companies further, with Hargreaves Lansdown also set to delist. Across the whole exchange there were five delistings for every new listing that year. Speculation continued into the close of 2024 over whether index stalwarts British American Tobacco, Rio Tinto and Shell might be next.

  On the 27th of February 2026, the FTSE 100 set both of its all-time records in a single session. It closed at 10,910.55 points and touched an intraday high of 10,934.94. The benchmark had started at a base level of exactly 1,000 points on the 3rd of January 1984, more than four decades earlier. The year before, in 2025, the index had already jumped 21.51%, closing at 9,931.38 points. That rally carried straight into the records set the following February.

  That climb links back to an older, quieter index still ticking away underneath the FTSE 100's name.

• 8. The FT 30's Legacy

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  Established in 1935, the FT 30, also called the Financial Times Index or the FT Ordinary Index, is the oldest continuous stock index in the United Kingdom. It tracks companies from the industrial and commercial sectors only, excluding financial firms and government stocks, in a structure similar to the Dow Jones Industrial Average. Today it is largely obsolete, made redundant by the very index it once handed its spotlight to.

  The FT 30 also saw wild swings long before the FTSE 100 existed. In 1974, the index collapsed to 142.17, a drop of 55.33%, amid the economic turmoil of the period. It rebounded by 136.32% the very next year, closing 1975 at 335.98.

  Of its original constituents, three companies still sit inside the FTSE 100 today: Tate & Lyle, Imperial Tobacco and Rolls-Royce. Rolls-Royce has not been continuously listed since, and Imperial Tobacco spent years as a subsidiary of Hanson before re-emerging under its current name, Imperial Brands. Tate & Lyle is the only one of those original names still counted inside the FT 30 itself, since membership there is not strictly based on market capitalisation.

  Of the entire original 1935 lineup, the best performer over the decades has been Imperial Tobacco, the company now known as Imperial Brands.