1.

Market capitalisation
The LSE is owned by the London Stock Exchange Group, which was created in 2007 when the LSE merged
with the Borsa Italiana. It is the most international stock exchange, with over 3000 companies across 70 countries.

Table 1: Market capitalization of London Stock Exchange from 2015 to 2018

Year Market Capitalization

2015 $6,1 trillion

2016 $3,5 trillion

2017 $5,8 trillion

2018 $4,38 trillion

(Source: Caproasia)

In 2015, London Stock Exchange ranked 3 rd among world’s largest stock exchange, just after New York
Stock Exchange and NASDAQ.

Table 2: Market capitalization of world’s largest stock exchange in 2015

Ranking World’s Largest Stock Exchange Total Market Capitalization

1 New York Stock Exchange $18.3 Trillion

2 NASDAQ $6.7 Trillion

3 London Stock Exchange $6.1 Trillion

4 Tokyo Stock Exchange $4.4 Trillion

5 Shanghai Stock Exchange $3.9 Trillion

(Source: Caproasia)

In 2016, London Stock Exchange ranked 5th among world’s largest stock exchange, after New York Stock
Exchange, NASDAQ, Tokyo Stock Exchange, Shanghai Stock Exchange, Shanghai Stock Exchange.
 Table 3: Market capitalization of world’s largest stock exchange in 2016

2016 Total Market % Change in 2015

World’s Largest Stock Exchange
Ranking Capitalization (USD)

1 New York Stock Exchange $19.6 Trillion 10.00%

2 NASDAQ $7.8 Trillion 6.80%

3 Tokyo Stock Exchange $5.1 Trillion 3.40%

4 Shanghai Stock Exchange $4.1 Trillion 9.80%

5 London Stock Exchange $3.5 Trillion 9.90%

Also, in 2016, London Stock Exchange held the first place in Europe Stock Exchange with $3.5 Trillion.

Table 4: Ranking of European Stock Exchange

Total Market
2016 Ranking Europe Stock Exchange
Capitalization

1 London Stock Exchange $3.5 Trillion

2 Euronext $3.5 Trillion

3 Frankfurt Stock Exchange $1.7 Trillion

4 SIX Swiss Exchange $1.4 Trillion

5 OMX Nordic Exchange $1.3 Trillion

6 BME Spanish Stock Exchange $0.7 Trillion

7 Moscow Stock Exchange $0.6 Trillion

8 Oslo Stock Exchange $0.2 Trillion

(Source: Caproasia)

However in 2016, London Stock Exchange had its name on the list of stock exchanges having the worst
performance in total market capitalization. Its market capitalization declined from $6,1 trillion in 2015 to $3,5 trillion
in 2016.
 Table 5: Shrinking Stock Exchange Value in 2016

% Change (in USD) with

2016 Ranking Shrinking Stock Exchange Value
2015

1 Mexican Stock Exchange 17.10%

2 London Stock Exchange 9.90%

3 Shanghai Stock Exchange 9.80%

4 BME Spanish Stock Exchange 9.70%

5 SIX Swiss Exchange 6.90%

(Source: Caproasia)
I. Introduction
I.1. History
The beginnings of the London Stock Exchange (LSE) started in the later parts of the 1600s, when traders
began to sell and buy shares in companies that attempted to raise capitals for their journey of exploring and
merchandise trading in the new markets around the world, particularly the European exploration of the Pacific.
At that time, there was a famous exchange opened by Queen Elizabeth I of England in 1571 called the Royal
Exchange. However, in the 17th century, with a royal title, it did not allow common stockbrokers to be involved due
to their manner of rude, which led to the activities operated in other establishments such as nearby coffee shops, which
noticeably was the Jonathan’s Coffee House whose lists of prices and exchange rates were published regularly every
few days.
In 1773, Jonathan’s Coffee House owner together with 150 other brokers, formed a club and opened a new
and more formal "Stock Exchange" in Sweeting's Alley. In 1801 the London Stock Exchange was formally born and
in 1802 for the first time the exchange moved into a modern building in Chapel Court. Members were required to
register with the exchange and the first codified rule book was introduced in February 1812.

I.2. Development
After one and a half decade, in March 1973, the London Stock Exchange formally merged with the eleven
British and Irish exchanges (which had previously published due to the demand in cities like Manchester or Liverpool)
including the Scottish Stock Exchange. The Exchange signature index called FTSE 100 Index (generally pronounced
“Footsie 100”) was launched by a cooperation with the Financial Times on January 1984. Seven years later, the trading
name of the Exchange officially became “The London Stock Exchange”.
Besides, the most remarkable development made for the London Stock Exchange happened on October 27th
1986. At that time, under the governance of Margaret Thatcher, a deregulation called “Big Bang” set various measures
to improve the performance of the Exchange, including the removal of minimum fixed commissions and of the
division between stockjobbers (market makers) and stockbrokers (professional dealers) - both due to the Restrictive
Trade Practices Act 1956 (so they could also participate in both roles at a time). Another crucial evolution occurred
in the form of the Exchange which was swapped from open – outcry1 to electronic and screen – based trading.
In 2001 – an anniversary of 200 years - the shareholders of the Exchange voted to make a decision on turning
it into a public limited company (plc), and also in that time its role had been transferred from UK Listing Authority to
the Financial Services Authority (UKLA to FSA).
In 2007, the London Stock Exchange merged with Borsa Italiana (the only Italian Stock Exchange), creating
London Stock Exchange Group (LSEG), but they have been functioning as two separate entities.

II. Main functions

1
a method of communication between professionals on a stock exchange or futures exchange typically on a trading floor. It involves shouting and
the use of hand signals to transfer information primarily about buy and sell orders.
 The London Stock Exchange provides companies from all around the globe chances to raise money from
concerned investors. The foremost aspiration of the Exchange is to supply attractive, efficient and well - regulated
market for firms, investors and intermediaries, such as stockbrokers.
Being one of the oldest stock exchanges (to be ranked in the fourth after Amsterdam – 1602, Paris – 1724,
Philadelphia – 1790), the Exchange provided a trading foundation where its members could buy and sell shares.
Nowadays, with the swift development of technology, share trading can almost be done through computers, with
highly developed systems that can process more than a million trades every single session.
To investors, the London Stock Exchange presents the shares of 2153 (as October 31st 2018) UK and foreign
companies. For firms, the Exchange provides access to investors from around the world, ranging from large institution
to private individuals.
Moreover, in an integrated world with unlimited chances of businesses, the London Stock Exchange is also
one of the most reputable providers of high – quality prices, news and other related information to the international
financial community.

V. The role of London stock exchange in the world economy

Firstly: Source of business capital

The London Stock exchange provides a place for both businesses in the developed and developing world to
issue shares to the public. When businesses have access to such capital, they can easily expand their capitalization,
their operation and create more job opportunities. From the national perspective, it will help the government to lower
unemployment levels and earn more revenue from business taxes 2.
Secondly: Promotes investment
Investments are a key for economic trade, growth, and prosperity of every country in the world. Nowadays,
stock markets, especially famous markets like the London stock exchange is a top destination for investors all over
the world. In 2006, LSE raised more than 100 billion dollars for 100 companies, in which there are foreign companies.
To February 2007, LSE listed 3,211 companies with a market capitalization of $ 8,920 billion. 95% of investors in the
LSE are professional financial institutions, capable of providing long-term investments to companies.3
For example: In the Asia - Pacific region, to June 2007, Mr. Martin Graham - the director of LSE's markets,
visited the Vietnamese markets and said: "Vietnam now has 4 listed companies in LSE, includes Indochina Capital
(Main market), Vietnam Hldg Ltd, Vietnam Opportunity Fund and VinaLand (Alternative Investment Market) with
the total market capitalization about 1,97 billion dollars''.
Thirdly: Influences economy perception

2
According to the securities law, enterprises are responsible for paying taxes on a case-by-case basis
3
Source: According to "LSE - the gateway to international capital mobilization", Financial Investment Saigon (http://www.sggp.org.vn/lse-cua-
ngo-huy-dong-von-quoc-te-331360.html)
 The UK is one of the powerful economy in the world. Therefore, when the stock exchange market of the UK
lose value, consequences can be terrible for other economies, it affects directly to companies or investors.
According to the official figure from the London Stock exchange in “Companies of London Stock Exchange”
(as at 31 October 2018), there are 2152 companies are admitted to take part in the London stock exchange market, in
which:
Sector: There are many different sectors, including: Financials, Industrials, Health Care, Consumer Services,
Oil & Gas, Consumer Goods, Basic Material, Technology, Telecommunications, Utilities,…
Country of incorporation: UK, Australia, Ireland, Taiwan, South Africa,…
Region: EU, Middle East, North America
Markets: There are 1167 companies take part in Main Market, 935 companies take part in AIM, 22 companies
take part in Professional securities market and some other small markets.
There are three Vietnamese companies: Vietnam enterprise investments limited, Vietnam holding limited,
Vinacapital Vietnam opportunity fund Ld. are admitted to participate in the London Stock exchange market in
financial sector.