FTSE 100

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What is the FTSE 100 index?

In the financial world, FTSE are the initials for the Financial Times Stock Exchange, synonymous with the FTSE 100 Index, more commonly noted as the FTSE 100. FTSE Group is the name of the company that manages this and other financial indexes, such as the FTSE 250.

The index’s name is a mix of its original co-owners, the Financial Times and the London Stock Exchange (now wholly owned by the latter). The FTSE 100 is calculated in real time, and is updated and published on an intra-second basis within opening hours. It’s commonly referred to as the Footsie, and is probably the most popular and widely used stockmarket index in the world, due to London’s financial sector importance. The FTSE 100 encompasses around 80% of the market capitalisation of the London Stock Exchange.

Due to the importance given to the market capitalisation, usually big companies comprise a greater portion of the index.

As with other indexes throughout the world, the FTSE 100 is taken as an indicator of general economic prosperity and particularly among qualifying UK companies. Nevertheless, most of the companies included in the index operate in countries all over the world. In reality, the movements of this index are not a relatively strong indicator of the performance of the UK’s economy. The FTSE 250, more focused on smaller, domestic companies, resembles a better indicator of the UK’s economy in general terms.

Every quarter, usually the Wednesday following the first Friday in the months of March, June, September and December, there are revisions to establish the companies that will make up the FTSE 100. Any changes to the constituents of the index are made based on values taken from companies after the close of business the night before reviews are conducted.

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Category: Financial Glossary

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