FTSE stands for the Financial Times Stock Exchange. It is a group of companies. It is also known as FTSE Russell. It mainly provides stock market indices of UK based companies listed on the London Stock Exchange.
History of FTSE:
FTSE Company started in 1984 by Pearson with the base level of 1000, listing the 100 most valuable companies in the UK. It was trading almost 8 points lower within five months of its beginning, but it soon moved higher, and the FTSE 100 index trading was adopted as a benchmark. For ten years, this company faced many ups and downs because of recession and some because of raised US rates and Asia financial crisis.
In 1995 FTSE group was created by a joint venture of a former parent of FTSE, Pearson, and the London Stock Exchange Group. FTSE group had many other joint ventures as well. It had a joint venture with a Chinese company named Xinhua Finances. Both groups came together for a product called the FTSE-Xinhua China A50 index. Other products were the CSI 300 Index and the sub-index CSI 100 and SSE 50 for the top 50 companies of Shanghai Stock Exchange. In 2010, this joint venture was terminated.
In 2011 Pearson sold its share of stocks to the London Stock Exchange Group, and now the FTSE group is entirely owned by LSE.
The main office of FTSE that is operated by the London Stock Exchange is situated in Canary Wharf. FTSE has sub-offices in many other countries where it works the domestic indices. It has offices in Tokyo, Toronto, New York City, San Francesco, Paris, Hong Kong, Frankfurt, Sydney, Milan, Beijing, and Madrid.
Initially, the FTSE Company was created to deal with indices only, especially indices of the top 10 valuable British companies. But over the years, this company has shown tremendous growth and transformed into a group of companies that deals in various businesses. FTSE now operates in 80 countries with 250,000 indices. In 2013, it was ranked as number three who provides indices worldwide.
The following are the businesses in which FTSE Group deals:
- 60 % of its total revenue is earned through annual subscription fees.
- The remaining 40 % is made by issuing licenses for index-based products.
Financial data vendors, fund managers, and financial consultants are FTSE significant clients. FTSE products are used worldwide by the market participants for performance measurement of the companies, investment analysis, hedging, and asset allocation. FTSE also provides services to investment banks, pension funds, and asset managers to benchmark their investment performances. FTSE other products:
The first thing which comes into anyone’s mind by listening to FTSE is the FTSE 100 index. Apart from 100 indexes, there are many other indices of FTSE. It has seven main groups of indices: Fixed Income, Alternative Investment Real Estate, Regional and Partner, Global Equity, Investment Strategy, and, Responsible Investment.
Some of the popular indices of FTSE are the following:
FTSE 100 Index:
There are many other names of it like, FTSE 100, FTSP 100 index, or the Foosties. FTSE is used to measure a company’s prosperity as it has a share index of the top 100 companies listed on the London Stock Exchange. That means if a company makes its place among the FTSE 100 index, it becomes one of the 100 most valuable UK companies, according to UK Company Law.
FTSE 250 Index:
This index is based on the company’s capitalization weight. It consists of 101st to the 350th largest companies listed on the London Stock Exchange. This index is calculated in Real time, and it is published on the index every minute.
FTSE 350 Index:
This index is also based on market capitalization weight, and it is the combination of the FTSE 100 and FTSE 350 index. FTSE Russell maintains this index. Those companies who do not make it to the FTSE 100 index try to rank in the FTSE 350 index to become one of the 350 top valued companies listed on the London Stock Exchange.
FTSE All-Share Index:
The original name of this index is FTSE Actuaries All Share Index, and it comprises 600 companies traded on London Stock Exchange. It aggregates the FTSE 100 index, FTSE 250 index, FTSE 320 Index, and FTSE SmallCap Index. From December 2017, this index comprises 641 companies.
Some other products of FTSE are
- FTSE MIB
- FTSE 4Good Index
- FTSE SmallCap Index
- FTSE AIM UK 50 Index
- FTSE AIM All-Share Index
- FTSE AIM 100 Index