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UK 100

 

The UK 100, or London Stock Exchange, is the main indicator on the LSE. It is traded not only on the main floor, but also on the intercontinental ICE: you can find futures on this instrument there. On the Chicago Exchange you can also buy a part of the UK 100 index companies in the size of a mini-contract.

Of course, in all cases no physical delivery of index components is assumed: all such contracts belong to derivatives, i.e. derivative financial instruments. It is not the index itself or parts of it that are traded, but transactions based on changes in its price.

In the light of this, the FTSE 100 brokers often offer CFDs, Contracts for Difference. The UK 100 index price during the day changes on average by 2-5%. That is, you can just initially make a Sell trade on the Footsie and close it when the price of the index falls enough for you to lock in a profit.

UK 100 index companies: History

From practical trading, let’s move on to the history of the index – surely there are traders among you who want to know how the UK 100 index companies got their name on the stock exchange.

In 1984 at the London Stock Exchange it became necessary to transfer all commercial and trading activities to computer algorithms. Digitalization required a timely indicator, which would fairly reflect the situation in the national economy and big business.

Until then, of course, two popular indices had been calculated: the All-Share Index and the Financial Times Ordinary Index. However, neither of them suited the changed needs: it was necessary to develop an index, which would include the largest companies of the United Kingdom by capitalization. 

Then a subsidiary of the London Stock Exchange, the FTSE Group, volunteered to compile and derive a new type of index, which was named after its creators. It appeared on the first business day of that year, January 3, 1984.

How is the UK 100 Index live calculated?

The index started with a round number of 1,000 points: each of the 100 index companies was allocated 10 points in total.

Until 1995 the UK 100 index live was updated every minute, but then they decided to do it more often, providing the electronic site with a result of changes every 15 seconds. After another two years, the index chart was presented live from 08:00 to 16:30 London time, and it became a competitive trading instrument in its own right.

The UK 100 index usually includes 98-100 companies: their numbers change slightly from quarter to quarter. The main thing for the expert committee is not so much the exact number, but rather the strictness of the requirements for each participant in the index.

UK 100 live chart: stock requirements

Thus, in addition to the fact that the shares of the issuer must be traded on the London Stock Exchange LSE, and their value must be denominated in pounds or euros, the company’s headquarters must be located only in the UK, even if the main activity is carried out in other countries. This condition is imposed to make sure that taxes from the capital of the largest companies in the index go to the treasury of the United Kingdom.

Another important condition is the percentage of freely tradable shares on the exchange (calculated on their total issued number). There is a special term for this characteristic, Free Float, and its value should be only 25% if the company is British, and 50% if foreign.

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