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FTSE 100 Index

British stock market index From Wikipedia, the free encyclopedia

FTSE 100 Index
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"UKX" redirects here. For the airport code, see Ust-Kut Airport.

The Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, FTSE 100, FTSE, or, informally, the "Footsie" /ˈfʊtsi/, is the United Kingdom's best-known stock market index of the 100 most highly capitalised blue chips listed on the London Stock Exchange.[1]

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History

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The index started on 3 January 1984,[2][3] having been constructed by the London Stock Exchange to better reflect activity on the market. The index would replace the Financial Times' own FT 30 after its public unveiling on 14 February.[4][5] As late as 10 February, the Stock Exchange referred to the index as 'SE 100', cutting out the Financial Times who had not contributed to its construction. Recognition was ultimately given to the fact that having the FT involved in the official launch possessed value.[6]

The new index allowed the Stock Exchange's own London Traded Options Market (LTOM) to launch an options contract derived from the FTSE's real-time data in May 1984, while competitors LIFFE were quick to coincide their launch of the futures contract.[7][8][9]

Usage of the index grew, although the tradeable index contracts struggled to gain traction: annual volume on the FTSE futures contract fell short of 89,000 in 1985, pale in comparison to the 15 million lots traded on the S&P 500 index contract.[10] By 1986, Margaret Thatcher's sweeping financial deregulation and high profile privatisations of index members British Telecom, British Gas, and British Aerospace had culminated in the Big Bang.[11] The combination of a new index, major privatisations, LIFFE tradable derivatives, and promotion by the Financial Times led to the FTSE 100 becoming the most widely used indicator of whether the UK stock market was rising or falling.[12]

In 1987, privatisations continued with British Airways and British Petroleum. The latter concluded on the same day as Black Monday, a crash in which the index fell 21.73% in two days; one of those days is still the index's worst single-day return, –12.22%.[11] While the index was in freefall trading volume of the futures contract hit a record high of 9,111 contracts in a single day. By comparison the volume in the week preceding the crash averaged 2,400 contracts per day.[13]

By the spring of 1992 LTOM was sold to LIFFE for a nominal sum, consolidating derivatives of the FTSE 100 index into one exchange.[14][15][16] Trading of these instruments remained solely in the institutional domain since the significant investment required to deliver electronic trading limited retail access at the time.[17] Nonetheless annual volumes for 1992 in FTSE futures and options contracts hit a new high of 2.6 million and 2.2 million respectively.[18] In the autumn the Bank of England directed by HM Treasury under John Major's government failed to prop up sterling to maintain the European Exchange Rate Mechanism. A swift devaluation of sterling on Black Wednesday and exit from the ERM benefitted the globally trading FTSE index constituents enormously as exports became cheaper overnight.[19] Closing on the 15 September 1992 at 2,370.0 the index would almost triple by the end of the decade hitting a high of 6,930.2 on 30 December 1999.[20]

In 2024, there were the most delistings from the London market since the 2008 financial crisis, with companies citing higher valuations and cheaper costs available by switching to NYSE. Among them Ashtead Group, CRH, and Flutter represented almost £120 billion in FTSE 100 market capitalisation. Takeovers from private equity further reduced the available pool of companies that could be drawn on to populate the index, with Hargreaves Lansdown also set to delist. Across the entire exchange there were five delistings for every new issue, with speculation at the close of the year around the future of index stalwarts British American Tobacco, Rio Tinto, and Shell.[21]

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Description

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The index has trading symbol UKX[1] and is maintained by FTSE Russell, a wholly owned subsidiary of London Stock Exchange Group, which originated as a joint venture between the Financial Times and the London Stock Exchange. It is calculated in real time and published every second when the market is open.[2]

The FTSE 100 broadly consists of the largest 100 qualifying UK companies by full market value.[22] The total market value of a company is calculated by multiplying the share price of the company by the total number of shares they have issued.[23] However, many of these are internationally focused companies: therefore the index's movements are a fairly weak indicator of how the UK economy is faring and are significantly affected by the exchange rates of the pound sterling.[24] A better indication of the UK economy is the FTSE 250 Index, as it contains a smaller proportion of international companies.[25]

Even though the FTSE All-Share Index is more comprehensive, the FTSE 100 is by far the most widely used UK stock market indicator. Other related indices are the FTSE 250 Index (which includes the next largest 250 companies after the FTSE 100), the FTSE 350 Index (which is the aggregation of the FTSE 100 and 250), FTSE SmallCap Index and the FTSE Fledgling Index. The FTSE All-Share aggregates the FTSE 100, FTSE 250 and FTSE SmallCap.[1]

The index consists of 20 ICB sectors, four of which had a market capitalisation exceeding £200 billion as of 31 March 2025. These are Banks, Health Care, Industrial Goods and Services and Energy, which together account for approximately 50% of the index's capitalisation.[26] On the same date, there were four companies with a market cap exceeding £100 billion: AstraZeneca, Shell, HSBC and Unilever, which together accounted for approximately 29% of the market cap.[26]

Each calendar quarter, the FTSE's constituents are reviewed and some companies exit or enter the index, resulting in irregular trading volume and price changes as market participants rebalance their portfolios.[3]

Weighting

In the FTSE indices, share prices are weighted by free-float capitalisation, so that the larger companies, with more of their stock "floating", make more of a difference to the index than smaller companies. The basic formula for these indices is:[27]

expanded to,

where the sum of the products of the , , and for each component beginning at through to, usually, at time are divided by the to give the .

The free float factor represents the percentage of all issued shares that are readily available for trading, rounded up to the nearest multiple of 5%. The free-float capitalisation of a company is its market capitalisation multiplied by its free float adjustment factor. It therefore does not include restricted stocks, such as those held by company insiders.[27]

Futures contracts

FTSE futures contracts are traded on the Euronext Equities & Index Derivatives (EUREID) exchange. The value of each contract is 10 GBP × index points and is specified as:[28]

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Record values

The index has reached the following record values:

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The index began on 3 January 1984 at the base level of 1,000.[29] The highest closing value of 8,871.31 was reached on 3 March 2025 and the highest intra-day value of 8,908.82 also reached on 3 March 2025.[30]

Annual returns

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The following table shows the annual development of the calculation of the FT 30 Index from 1969 to 1983, and the FTSE 100 since 1984.[31][32][33][34]

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Constituents

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The following table lists the FTSE 100 companies after the changes on 24 March 2025.[35]

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Past constituents

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All changes are due to market capitalisation unless noted otherwise.

Source: "FTSE: FTSE 100 Constituent Changes" (PDF; 57.9 KB)

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FT 30

Main article: FT 30

The oldest continuous index in the UK is the FT 30, also known as the Financial Times Index or the FT Ordinary Index (FTOI).[232] It was established in 1935 and nowadays is largely obsolete due to its redundancy. It is similar to the Dow Jones Industrial Average, and companies listed are from the industrial and commercial sectors. Financial sector companies and government stocks are excluded.

Of the original constituents,[233] three are currently in the FTSE 100: Tate & Lyle, Imperial Tobacco and Rolls-Royce, although Rolls-Royce has not been continuously listed and Imperial Tobacco was a subsidiary of Hanson for a number of years, and is now renamed as Imperial Brands. Only one of the original FT 30 companies is still in that index:[234] Tate & Lyle (membership is not strictly based on market capitalisation, so this does not mean they are necessarily among the top thirty companies in the FTSE 100). The best performer from the original lineup has been Imperial Tobacco.[235]

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See also

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References

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