Stock market exchanges
Chapter 1: Intro
How does a company list? What are the biggest exchanges? Do they trade every day? Here’s our lowdown on stock market exchanges.
First, let’s look at the London Stock Exchange (LSE). Though founded in 1801, its roots actually stretch back much further to the coffee houses of 17th-century London. Today, it hosts the UK’s top 100 companies, called the FTSE 100. It also hosts the FTSE All-Share index, absorbing more than 900 public companies in total.
The LSE also operates the Alternative Investment Market (AIM) where it’s more affordable to list and where the rules, generally, are less onerous.
The biggest change for the LSE arrived on 27 October 1986 when share trading went electronic. This made commissions smaller and trading far more efficient: good news for the average investor, cutting fees and upping transparency; bad news for the City’s ‘old boy club’ and goodbye to many over-extended alcoholic lunches in the process.
Other well-known stock exchanges including the New York Stock Exchange (the biggest by market capitalisation) and the Tokyo Stock Exchange. Here’s a complete list of the most active stock markets today.
Chapter 2: How does a company list?
Most companies ‘go public’ because they want to raise cash and create a market for their shares. In exchange, they give up some ownership of the business. This ‘public’ journey can also create positive – or negative – publicity en route.
A huge amount of time, not to mention expense, is invested in the flotation process, persuading investors of the robustness of the business. Corporate governance, lawyers, a comprehensive financial communication and investor relations strategy… The governance load is immense.
A well-prepared initial public offering (IPO) usually takes between 15-20 weeks. Companies can choose from a Premium Listing or a Standard Listing. The Premium Listing means you have to meet higher-than-average standards. A Standard Listing means it meets basic EU legislation while the compliance burden is lighter.
Chapter 3: When are stock exchanges open for business?
Given world time zones, you’ll always find one that’s actively trading. But the London Stock Exchange – which itself became a public limited company in 2000 – trades from 8am to 4.30pm Monday to Friday.
Where it all started:
In 1698, Jonathan’s Coffee House in London’s Exchange Alley began issuing stock and commodity prices. It was there – among the smell of clay pipes, coffee, brothels and other “evil smells” – that the origins of the London Stock Exchange were born.