London Stock Exchange (LSE): Definition, History, and Major Events

Posted on by user

London Stock Exchange (LSE): Definition, History, and Major Events

Definition and overview

The London Stock Exchange (LSE) is the United Kingdom’s primary stock exchange and one of the world’s oldest and largest trading venues. It provides electronic equities trading and access to deep, liquid pools of capital and is home to thousands of companies from more than 60 countries. The FTSE 100 (or “Footsie”) is the LSE’s best‑known benchmark index, representing 100 large-cap British companies.

Key takeaways

  • One of the oldest stock exchanges globally and the largest in Europe.
  • A leading international center for capital raising, market data and liquidity.
  • The 1986 “Big Bang” deregulation modernized trading, introduced electronic systems and opened London to global financial firms.
  • The LSE is part of the London Stock Exchange Group (LSEG), which owns FTSE Russell, Refinitiv and LCH Clearing.

History and evolution

  • Origins (late 1600s–1801): Informal trading began around 1698 at Jonathan’s Coffee House, where broker John Castaing recorded prices. By 1801 brokers had adopted rules and membership fees, creating the first regulated exchange in London.
  • Consolidation (20th century): Regional exchanges were gradually integrated; in 1973 many merged into the Stock Exchange of Great Britain and Ireland, later renamed the London Stock Exchange.
  • Big Bang (1986): On October 27, 1986, major reforms deregulated the U.K. equity market. Key changes included:
  • Introduction of electronic trading replacing open outcry
  • Removal of fixed minimum commissions
  • Abolition of the separation between brokers and investment advisers
  • Permission for foreign ownership of U.K. brokerage firms
    These reforms increased competition, encouraged consolidation, and helped position the LSE as a modern global exchange.
  • LSEG formation (2007 onward): In 2007 the LSE merged with the Milan Stock Exchange (Borsa Italiana), forming the broader London Stock Exchange Group (LSEG), which expanded the group’s market infrastructure and data businesses.

The Main Market and listing segments

The LSE Main Market offers real‑time pricing, broad investor access, benchmarking via FTSE indices and high visibility. Main Market listings are available through three primary segments:

  • Premium
  • For equity shares of commercial trading companies.
  • Subject to “super‑equivalent” UK rules and higher governance standards.
  • Eligible companies may be included in FTSE indices and can access a wider investor base.
  • Standard
  • Open to equity shares, Global Depositary Receipts (GDRs), debt securities and derivatives that meet minimum requirements.
  • Lower compliance burden than Premium, often used by companies from emerging markets to tap London capital.
  • Specialist Fund Segment
  • Designed for high‑growth operating companies and specialized investment entities.
  • Targets institutional or professionally advised investors and suits companies not eligible for Premium or Standard listings.

Who the LSE Group owns

The London Stock Exchange Group (LSEG) includes:
* FTSE Russell — index and benchmarks provider
* Refinitiv — market data and analytics (part of LSEG following acquisition)
* LCH Clearing — central counterparty clearing services

Notable listed companies

Examples of major constituents on the LSE include AstraZeneca, Shell, HSBC, Unilever and BP (representative of the large-cap cohort often found in the FTSE 100).

Why the LSE matters

The LSE is a central hub for international finance, offering market access, liquidity and benchmark pricing that support capital formation across sectors and geographies. Its long history, combined with modernization efforts such as the Big Bang and the creation of LSEG, has helped maintain London’s role as a leading global financial center.