London Stock Exchange - Definition
If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.
- Marketing, Advertising, Sales & PR
- Accounting, Taxation, and Reporting
- Professionalism & Career Development
Law, Transactions, & Risk Management
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
- Business Management & Operations
- Economics, Finance, & Analytics
London Stock Exchange Definition
The London Stock Exchange (LSE), started more than 300 years ago, is based on the Antwerp Bourse's model. In 1571, Queen Elizabeth I of England officially opened this exchange. In October 2007, a successful merge happened between Milan Stock Exchange (Borsa Italiana) and the London Stock Exchange which led to the creation of the London Stock Exchange Group. Currently, The London Stock Exchange is the biggest stock exchange in both the UK and Europe.
A Little More on What is the London Stock Exchange
Some of the securities traded in the London Stock Exchange include Common stock, derivatives, bonds, debt securities, exchange-traded funds, gilt-edged securities, covered warrants, structured products, global depository receipts etc. The London Stock Exchange has two major markets used by companies to trade.
- The main market- This market is used by more than a thousand big corporations which are established in numerous countries around the world. Over the years, companies in this market have raised hundreds of billions of pounds through new and further issues. This market has an FTSE 100 index which is made up of the main share index of 100 listed UK companies which have the highest capitalization.
- Alternative Investment Market- This is an international market for smaller companies which are looking for growth capital. These companies may be venture capital-backed, early stage or more established. This market is designed to be flexible with an easy admission process for new companies that require to be publicly listed since it is classified as a Multilateral Trading Facility.
The LSE uses a trading platform called Millennium Exchange which is Linux-based. It currently traded by hundreds of international companies from around the world.
References for the London Stock Exchange
Academic Research on the London Stock Exchange (LSE)
Transparency and liquidity: A study of block trades on the London Stock Exchange under different publication rules, Gemmill, G. (1996). The Journal of Finance, 51(5), 1765-1790. This study uses a sample of thousands of blocks derived from the LSE covering three publication regimes to examine whether delaying the publication of prices for block trades to reduce a markets' transparency impacts liquidity. Economic impact of national sporting success: evidence from the London stock exchange. Ashton, J. K., Gerrard, B., & Hudson, R. (2003). Applied Economics Letters, 10(12), 783-785. This paper associates the performance of the England football team with the daily changes in the FTSE 100 index which contains the share index of the 100 most capitalized companies in the LSE. Calendar effects in the London Stock Exchange FTSE indices, Mills, T. C., & Andrew Coutts, J. (1995). The European Journal of Finance, 1(1), 79-93. This article focuses on the period from January 1986 to October 1992 to look for anomalies in the FTSE 100, Mid 250 and 350 indices and the associated industry baskets. Do inventories matter in dealership markets? Evidence from the London Stock Exchange, Hansch, O., Naik, N. Y., & Viswanathan, A. S. (1998). The Journal of Finance, 53(5), 1623-1656. This paper investigates the central implication of the canonical model Ho and Stoll (1983) which states that the dealer behavior determines the relative inventory differences. It uses data derived from the London Stock Exchange. Globalization of stock markets and foreign listing requirements: Voluntary disclosures by continental European companies listed on the London Stock Exchange, Meek, G. K., & Gray, S. J. (1989). Journal of international business studies, 20(2), 315-336. This is an investigation of how Continental European companies listed in the London Stock Exchange comply with or exceed the requirements to disclose company annual reports to the stock exchange. Shortrun returns around the trades of corporate insiders on the London Stock Exchange, Friederich, S., Gregory, A., Matatko, J., & Tonks, I. (2002). European Financial Management, 8(1), 7-30. This article examines the patterns in the unusual returns in the days surrounding the trades made by company directors in the shares of their own company on the London Stock Exchange. Technical analysis and the London Stock Exchange: Testing trading rules using the FT30, Mills, T. C. (1997). International Journal of Finance & Economics, 2(4), 319-331. This study examines the predictive ability of several easy technical trading rules through analyzing data on the FT30 index in the London Stock Exchange from 1935 1994. Bidask spreads, trading volume and volatility: Intraday evidence from the London Stock Exchange, Abhyankar, A., Ghosh, D., Levin, E., & Limmack, R. J. (1997). Journal of Business Finance & Accounting, 24(3), 343-362. This study uses a sample 835 stocks together with their quote and transactions data and which were traded during the first quarter of 1991, to investigate the intra-day variations in the bid-ask spread, volume and volatility of stocks traded in the London Stock Exchange. Taxes and stock return seasonality: Evidence from the London Stock Exchange, Reinganum, M. R., & Shapiro, A. C. (1987). Journal of Business, 281-295. This paper investigates how the imposition of a capital gains tax leads to an exhibition of seasonality in the stock returns data of firms traded in the London Stock Exchange particularly in January and April. The effects of trade transparency in the London Stock Exchange: A summary, Board, J., & Sutcliffe, C. (1995). This study uses a two-year period data from the UK equity and equity options markets to examine the effects resulting from the recent opacity in the London equity market. Trading activity and stock price volatility: evidence from the London Stock Exchange, Huang, R. D., & Masulis, R. W. (2003). Journal of Empirical Finance, 10(3), 249-269. This article analyses data derived from the FTSE 100 stock index on the London Stock Exchange to determine whether trade frequency and average trade size affect price volatility for small trades.