London stock exchange, Financial Management

London Stock Exchange (LSE)

The origin of the London Stock Exchange goes back to the coffee houses of 17th century. London, where people willing to invest or raise money, bought and sold shares in Joint Stock companies. The world's first Joint Stock Company - The Muscury Company was founded in London in 1553. As the number of joint stock companies grew, so did the number of brokers - acting as intermediaries for investors. In 1760, a group of 150 brokers formed a club at Jonathan's coffee house where they met to buy and sell shares. In 1773, the members of this club voted to change the name of Jonathan's coffee house to Stock Exchange. The Exchange developed rapidly playing a major role in financing the UK companies during the industrial revolution. By the 19th century, more than 20 Stock Exchanges were operating around the country. At first, these provincial exchanges operated independently from London, but the increasingly sophisticated market of the 20th century brought the need for amalgamation in 1973. This historic year also saw female members admitted to the London market. The outbreak of the great war in 1914 threw Europe's markets into disarray. The London market was the last to close at the end of July, 1914. During the 1960s, business continued to grow, with member firms expanding their staff - so the decision was taken to construct a new trading floor and a 26-storey office block on the site occupied by the market since 1801.

In October 1986, major changes were brought about and after this ownership of member firms by an outside corporation was allowed. All firms became brokers/dealers and allowed to operate in a dual capacity - either buying securities from or selling them to clients without the need to deal through a third party. Trading moved from being conducted face to face on a single market floor to being performed via computers and telephones from separate dealing rooms. In 1986, the Stock Exchange became a private limited company under the Companies Act, 1985. While the LSE is a private limited company with shareholders, its profit cannot be distributed to its shareholders. Instead, profits were used for financing developments by the exchange in 1991. The exchange replaced the governing council of the exchange with a Board of Directors.

In April 1997, settlement moved to CREST Co., which operates the CREST electronic settlement system.

In June 1995, the Exchange launched Alternative Investment Market (AIM) to provide a market is accessible to both investors and companies from a wide range of backgrounds - including start-ups and more established firms. The Stock Exchange Electronic Trading Service (SETS) was launched on October 20, 1997. The electronic order book was introduced to bring greater speed and efficiency to the London market, making London an even more attractive and competitive place to do business. In July 1998, the LSE and Frankfurt's Deutsche Bourse decided to form a strategic alliance with the aim to harmonize the market for leading UK and German securities and developing a joint electronic trading platform. The first phase of the alliance went live at the start of January 1999, providing a common access package for both exchanges and a single point of liquidity for UK and German stocks.

 

Posted Date: 9/10/2012 5:51:35 AM | Location : United States







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