It was opened by Elizabeth I of England in During the 17th century, stockbrokers were not allowed in the Royal Exchange due to their rude manners. They had to operate from other establishments in the vicinity, notably Jonathan's Coffee-House. At that coffee house, a broker named John Casting started listing the prices of a few commodities, exchange rates and certain key provisions such as salt, coal and paper in Originally, this was not a daily list and was only published a few days of the week.
Public auctions during this period were conducted for the duration that a length of tallow candle could burn; these were known as "by inch of candle" auctions. As stocks grew, with new companies joining to raise capital, the royal court also raised some monies.
These are the earliest evidence of organised trading in marketable securities in London. After Gresham's Royal Exchange building was destroyed in the Great Fire of London , it was rebuilt and re-established in This was a move away from coffee houses and a step towards the modern model of stock exchange. The Royal Exchange not only housed brokers but also merchants and merchandise. This was the birth of a regulated stock market, which had teething problems in the shape of unlicensed brokers.
In order to regulate these, Parliament brought out an act in that levied heavy penalties, both financial and physical to those brokering without a licence. It also set a fixed number of brokers at , which was later increased as the size of the trade grew. This invariably led to several problems of its own, one of which was that traders began leaving the Royal Exchange, either by their own decision or through expulsion, and started dealing in the streets of London.
The street in which they were now dealing was known as ' Exchange Alley ', or 'Change Alley' which was suitably placed close to the Bank of England. Parliament tried to regulate this and ban the unofficial traders from the Change streets. Traders became weary of "bubbles" when companies rose quickly and fell, so they persuaded Parliament to pass a clause preventing "unchartered" companies from forming. In , Jonathan, together with other brokers, formed a club and opened a new and more formal "Stock Exchange" in Sweeting's Alley.
This now had a set entrance fee, through which traders could enter the stock room and trade securities. It was, however, not an exclusive location for trading, as trading also occurred in the Rotunda of the Bank of England. Fraud was also rife during these times and in order to deter such dealings, it was suggested that users of the stock room pay an increased fee.
This was not met well and ultimately, the solution came in the form of annual fees and turning the Exchange into a Subscription room. The Subscription room created in was the first regulated exchange in London, but the transformation was not welcomed by all parties.
On the first day of trading, non-members had to be expelled by a constable. In spite of the disorder, a new and bigger building was planned, at Capel Court. William Hammond laid the first foundation stone for the new building on 18 May.
It was finished on 30 December when "The Stock Exchange" was incised on the entrance. In the Exchange's first operating years, on several occasions there was a clear set of regulations or fundamental laws missing for the Capel Court trading. In February , the General Purpose Committee confirmed a set of recommendations, which later became the foundation of the first codified rule book of the Exchange.
Even though the document was not a complex one, topics such as settlement and default were, in fact, quite comprehensive. With its new governmental commandments and increasing trading volume in place, the Exchange was progressively becoming an accepted part of the financial life in the City. In spite of continuous criticism from newspapers and the public, the government used the Exchange's organised market and would most likely not have managed without to raise the enormous amount of money required for the wars against Napoleon.
After the war and facing a booming world economy, foreign lending to countries such as Brazil, Peru and Chile was a growing market. Notably, the Foreign Market at the Exchange allowed for merchants and traders to participate, and the Royal Exchange hosted all transactions where foreign parties were involved.
The constant increase of overseas business meant eventually the dealing in foreign securities had to be allowed within all of the Exchange's premises.
Just as London enjoyed growth through international trade, the rest of Great Britain also benefited from the economic boom. Two other cities, in particular, showed great business development, Liverpool and Manchester. Consequently, in both the Manchester and Liverpool stock exchanges were opened. Some stocks were known to rise in price by ten, twenty or even thirty percent in a week. These were times when stockbroking was considered a real business profession and such attracted many entrepreneurs.
Nevertheless, with booms came busts, and in the " Spanish panic " hit the markets, also followed by a second one two years later. By June , both participating members and brokers were taking up so much space that the Exchange was now uncomfortably crowded and continual expansion plans were taking place. Having already been extended west, east and northwards, it was then decided the Exchange needed an entire new establishment. Thomas Allason was appointed as the main architect, and in March the new brick building inspired from the Great Exhibition stood ready.
This was a huge improvement of both surroundings and space, with twice the floor space available. By the late s, the telephone, ticker tape and the telegraph had been invented. Those new technologies led to a revolution in the work of the Exchange. As the financial centre of the world, both the City and the Stock Exchange were hit hard by the outbreak of the First World War in Due to fears that borrowed money was to be called in and that foreign banks would demand their loans or raise interest, prices surged at first.
The decision to close the Exchange for improved breathing space and to extend the August Bank Holiday to prohibit a run on banks, was hurried through by the committee and Parliament, respectively.
The Stock Exchange ended up being closed from the end of July until the New Year, causing street business to be introduced again as well as the "challenge system".
The Exchange was set to open again on 4 January under tedious restrictions, as transactions were to be in cash only. Due to the limitations and challenges on trading brought by the war, almost a thousand members quit the Exchange between and When peace returned in November , the mood on the trading floor was generally cowed. In officials at the Exchange used their experiences from the First World War to draw up plans on how to handle a new war situation.
One of the main concerns were air-raids and the subsequent bombing of the Exchange's perimeters, and one suggestion was a move to Denham. This however never took place.
On the first day of September , the Exchange closed its doors "until further notice" and two days later war was declared. Unlike in the prior war, the Exchange opened its doors again six days later, on 7 September. As the war escalated into its second year, the concerns for air raids were greater than ever. Trading on the floor was now drastically low and most was done over the phone to reduce the possibility of injuries.
The Exchange was only closed for one more day during wartime, in due to damage from a V-2 rocket. After decades of uncertain if not turbulent times, business boomed for the stock market in the late s. This pushed the officials to find a more suitable space for its new accommodation.
The work on the new Stock Exchange Tower began in Firstly, two trading prohibitions were to be abolished. A report from the Monopolies and Mergers Commission recommended the admittance of both women and foreign-born members on the floor.
This also marked the first time the trading name became "The London Stock Exchange". This turned out to be one of the most useful indices of all and tracked the movements of the leading companies listed on the Exchange. On 20 July a bomb planted by the IRA exploded in the men's toilets behind the visitors' gallery. The area had already been evacuated and nobody was injured.
Police officials said that if there had been no warning, the human toll would have been very high. The biggest happening of the s was the sudden deregulation of the financial markets in the UK in The phrase "Big Bang" was coined to describe measures including abolition of fixed commission charges and of the distinction between stockjobbers and stockbrokers on the London Stock Exchange, as well as the change from an open outcry to electronic, screen-based trading.
In the Exchange launched the Alternative Investment Market , the AIM, to allow growing companies to expand to international markets. In , the Exchange's shareholders voted to become a public limited company, London Stock Exchange plc.
The Exchange also acquired Proquote Limited, a new generation supplier of real-time market data and trading systems. The old Stock Exchange Tower became largely redundant with Big Bang, which deregulated many of the Stock Exchange's activities as it enabled an increased use of computerised systems that allowed dealing rooms to take over work previously done by face-to-face trading. Attempts to occupy the square were thwarted by police. The protesters moved nearby to occupy the space in front of St Paul's Cathedral.
Issuer services help companies from around the world to join the London equity market in order to gain access to capital. The LSE allows companies to raise money, increase their profile and obtain a market valuation through a variety of routes, thus following the firms throughout the whole IPO process.
The London Stock Exchange runs several markets for listing, giving an opportunity for different sized companies to list. International companies can list a number of products in London including shares, depositary receipts and debt, offering different and cost-effective ways to raise capital. In the Exchange opened a Hong Kong office and has attracted more than companies from the Asia-Pacific region.
For the biggest companies exists the Premium Listed Main Market. For international companies that fall outside of the EU, it operates the Depository Receipt DR scheme as a way of listing and raising capital. Professional Securities Market This market facilitates the raising of capital through the issue of specialist debt securities or depositary receipt s DRs to professional investors. Specialist Fund Market Is the London Stock Exchange dedicated market, designed to accept more sophisticated fund vehicles, governance models and security.
It is suitable only for institutional, professional and highly knowledgeable investors. The Specialist Fund Market is an EU Regulated Market and thus securities admitted to the market are eligible for most investor mandates providing a pool of liquidity for issuers admitted to the market.
There are two main markets on which companies trade on the LSE: Main Market The main market is home to Over 1, large companies from 60 different countries.
Over the past 10 years [ when? A wide range of businesses including early stage, venture capital backed as well as more established companies join AIM seeking access to growth capital. This platform combines a periodic electronic auction book four times a day with standalone non-electronic quote driven market making.
Futures and options on the most liquid European stock underlyings and on European benchmark indices were expected to be launched in Q4 and Q1 subject to Financial Services Authority approval. MTS [ clarification needed ].More...