FTSE 100

Financial Dictionary -> Investing -> FTSE 100

The Financial Times Stock Exchange (simply known as the FTSE 100 'footsie') is a UK based index that tracks the top 100 high cap public companies taken from the London Stock Exchange, making it an important bench mark for the entire stock market as a whole. As well as being featured in the Financial Times newspaper, its performance is quoted by almost all analysts as a solid indication as to the way the British economy is doing. The FTSE 100 is now automatically calculated and produces a new figure every 15 seconds in conjunction with the LSE's computer systems. It has the same function as the United States based S&P 500 and is often used along with that figure to monitor the world economy.

The FTSE 100 began life in 1984, with a 1000 as its base level, and is still owned and operated by the FTSE Group (a combined venture between the Financial Times and the London Stock Exchange). Currently the index represents around 81% the London Stock Exchange's total market capitalization. This 81% makes up about 1,171 billion pounds.

Other than capitalization the selection process is based on liquidity, free float, nationality, and all companies must be public limited and have a valid listing on the London Stock Exchange in either Pounds Sterling or Euros. If a company is already listed on the FTSE 250 (a band below the FTSE 100) and they expand in to the top 90 corporations in terms of capitalization, they will be promoted at the next quarterly update.

Other FTSE owned indexes include the FTSE All Share Index, the FTSE 250 Index as mentioned, and the FTSE 350 Index which combines both previous indexes. Smaller cap companies are tracked on the FTSE Small Cap Index.
Listings as of 2008 include the Vodafone Group, Cadbury, British Sky Broadcasting Group and Barclays Bank.