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FTSE

What is the FTSE?

The FTSE is the FTSE 100, a share index of the 100 largest public companies listed on the London Stock Exchange. These are not the largest by the number of shares issued but by actual value. When commentators, newspapers, etc., refer to "The FTSE" they are referring to the FTSE 100.

"FTSE" itself stands for Financial Times Stock Exchange, reflecting the joint venture between the Financial Times newspaper and London Stock Exchange that initially began it. The index is now maintained by an independent group.

Shares in the companies are traded on the London Stock Exchange by traders trading on behalf of corporate or private clients. Trading takes place between 0800 BST & 1629 BST, at which time it goes into auction with the closing price being published at 1636 BST each week day.

The fact that the FTSE 100 might be up or down one day does not mean that all the shares travelled in that direction. It means that on balance the collective value of the included companies has gone up or down.

The FTSE in its current form began life on 3rd January 1984 with a base value of 1000 rising to its highest level to date of 6950.6 on 30 December 1999, before sliding back almost 50% courtesy of the bursting Dotcom bubble.

The index is updated quarterly with companies qualified to leapfrog over existing entrants entering the FTSE 100 with its now smaller companies being shown the door. This can have a number of consequences for a company, including the loss of interest from FTSE Tracker funds and the like. In short, there is a feel-good factor to being in the FTSE 100.

Other related indices include the FTSE 250 - the next largest 250 companies, the FTSE 350 - the FTSE 100 & FTSE 250 together, and AIM, or Alternative Investment Market - for smaller companies again.

The FTSE 100 index comprises approximately 80% of the market capitalization of the whole of the London Stock Exchange and for this reason is seen as the one of the leading barometers of health of the British economy. It is the leading share index in Europe.

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