London Stock Exchange

• 1. Origins And Coffee Houses

  ›

  In 1698, a broker named John Castaing began listing commodity prices at Jonathan's Coffee House in London. He published rates for salt, coal, paper, and exchange currencies on days that varied throughout the week. This informal activity marked the earliest evidence of organized trading in marketable securities within the city. Stockbrokers were barred from the Royal Exchange due to their perceived rude manners during the seventeenth century. They operated instead from nearby establishments like Garraway's coffee house where public auctions occurred while a tallow candle burned. These events were known as by inch of candle auctions because time was measured by the burning wax. The Royal Exchange itself had been destroyed in the Great Fire of London before being rebuilt in 1669. Parliament passed an Act in 1697 to regulate unlicensed brokers with heavy financial and physical penalties. A fixed number of one hundred brokers was initially set but increased as trade grew. Traders eventually left the Royal Exchange to deal in streets called Exchange Alley or Change Alley near the Bank of England. In 1773, Jonathan and 150 other brokers formed a club opening a new formal Stock Exchange in Sweeting's Alley. An entrance fee allowed traders to enter the stock room and trade securities though fraud remained rife. The Subscription room created in 1801 became the first regulated exchange in London despite initial disorder. On the 18th of May William Hammond laid the foundation stone for a new building at Capel Court which finished on the 30th of December.

• 2. Wars And Physical Resilience

  ›

  World War I began in 1914 causing prices to surge due to fears that borrowed money would be called in. The Stock Exchange closed from late July until New Year allowing street business to continue under challenge systems. Almost one thousand members quit between 1914 and 1918 while trading occurred only in cash after reopening on the 4th of January 1915. Peace returned in November 1918 leaving the mood on the floor generally cowed. World War II started when officials drew up plans in 1937 regarding air raids and bombing perimeters. The Exchange closed its doors on the 1st of September 1939 before reopening six days later on the 7th of September. A clutch of incendiary bombs hit the Exchange floor during the night of the 29th of December 1940 starting one of London's greatest fires. Trading dropped drastically as most activity moved over the phone to reduce injury risks. The Exchange remained open except for one day in 1945 following damage from a V-2 rocket. Trading continued in the house basement throughout these conflicts. Queen Elizabeth II opened the new Stock Exchange Tower building on the 8th of November 1972 featuring twenty-six storeys. On the 20th of July 1990 an IRA bomb exploded in the men's toilets behind the visitors gallery at 8:49 a.m. No injuries occurred because the area had been evacuated minutes earlier after a warning call. The explosion ripped a hole through the twenty-three-storey building sending glass and concrete onto Threadneedle Street.

• 3. The Big Bang Deregulation

  ›

  Financial markets underwent sudden deregulation in the United Kingdom during 1986 known as the Big Bang event. Measures included abolishing fixed commission charges and removing distinctions between stockjobbers and stockbrokers. Open outcry trading shifted to electronic screen-based systems replacing face-to-face interactions. In 1995 the Exchange launched the Alternative Investment Market or AIM allowing growing companies to expand internationally. Two years later Electronic Trading Service SETS brought greater speed and efficiency to market operations. CREST settlement service followed shortly after improving transaction processing capabilities. Computerized systems and dealing rooms replaced traditional trading floors making the old Stock Exchange Tower largely redundant. The LSE moved to Paternoster Square headquarters in 2004 close to St Paul's Cathedral. Shareholders voted in 2000 to become a public limited company named London Stock Exchange plc. The organization transferred its role as UK listing authority to the Financial Services Authority that same year. EDX London an international equity derivatives business was created in 2003 partnering with OM Group. Proquote Limited became part of the group providing real-time market data and trading systems.

• 4. Modern Markets And Technology

  ›

  Millennium Exchange serves as the Linux-based edition powering current trading platforms at the London Stock Exchange. Previous system TradElect relied on Microsoft's .NET Framework developed jointly by Microsoft and Accenture. Multiple periods of extended downtime plagued TradElect despite only two years of usage leading to planned migration in 2010. Main market migration to MillenniumIT technology completed successfully in February 2011 following earlier failures. SETS introduced in October 1997 operated until 2007 when newer systems took over. The London Market Information Link ran COBOL applications on HP Tandem servers before Infolect replaced it. Most stocks quote in GBP though some appear in EUR or USD allowing currency flexibility for listings. Over one thousand three hundred large companies from sixty countries trade on the Main Market today. FTSE 100 Index tracks movements of the one hundred most highly capitalized British companies listed there. AIM functions as a Multilateral Trading Facility under 2004 MiFID directive offering simpler admission processes. More than eighty issuers received Green Economy Mark designation by mid-2020 deriving fifty percent revenues from environmental products. Israeli tech companies have been instrumental boosting growth according to UK-Israel Tech Hub reports. LSE CEO Julia Hoggett has commended high-tech firms trading on the platform fostering bilateral economic ties.

• 5. Mergers And Global Expansion

  ›

  Deutsche Börse merger announced on the 3rd of May 2000 ultimately fell through without completion. Borsa Italiana S.p.A. terms agreed upon the 23rd of June 2007 creating leading diversified exchange group named London Stock Exchange Group. Combined entity remained two separate legal and regulatory entities while expanding clearing services across European markets. Turquoise Pan-European MTF acquired in 2009 enhanced regional coverage capabilities. Borsa Italiana including bond trading platform MTS sold to Euronext for €4.3 billion cash on the 9th of October 2020. Final price reached €4,444 million when acquisition completed the 29th of April 2021. NASDAQ rejected £1.6 billion takeover offer from Macquarie Bank in December 2005 calling it derisory. Unsolicited approach valuing company at £2.4 billion also turned down shortly after Macquarie withdrew bid. NASDAQ increased stake to 28.75% launching hostile offer minimum permitted bid of £12.43 per share on the 20th of November 2006. LSE immediately rejected bid stating it substantially undervalued the company despite accumulating large positions by hedge funds. Offer roundly rejected by shareholders receiving only 0.41% acceptances by deadline the 10th of February 2007. TMX Group merger announced the 9th of February 2011 creating combined entity worth £3.7 trillion market capitalization. Termination declared the 29th of June 2011 citing unlikely achievement of required two-thirds majority approval at shareholder meeting.

• 6. Post-Brexit Landscape

  ›

  Domestic listings declined following Brexit yet London remained Europe's most valuable stock exchange overall as of 2023. Total market capitalisation reached approximately US$3.4 trillion for listed companies as of July 2024. Approximately twelve percent of UK-resident individuals reported having investments in stocks and shares according to 2020 Office for National Statistics report. Fifteen percent of British adults held such investments based on 2020 Financial Conduct Authority findings. Trading sessions run from 08:00 to 16:30 local time excluding Saturdays Sundays and declared holidays. Trade reporting occurs between 07:15 and 07:50 with opening auction running 07:50 to 08:00. Continuous trading operates until 16:30 followed by closing auction period ending at 16:35. Order maintenance window extends from 16:35 to 17:00 before trade reporting only resumes 17:00 to 17:15. Auction uncrossings scheduled at 8:00, 9:00, 11:00, 14:00, and 16:35 via SETSqx service. New Year's Day Good Friday Easter Monday May Bank Holiday Spring Bank Holiday Summer Bank Holiday Christmas Day Boxing Day observed as holidays. If New Year's Day Christmas Day or Boxing Day falls on weekend following working day becomes holiday instead. Microsoft bought nearly four percent stake in London Stock Exchange Group as part ten-year cloud deal announced the 12th of December 2022.