London Stock Exchange (LSE)

The London Stock Exchange is located in the city of London, Great Britain. The London Stock exchange is the world’s fourth largest exchange in terms of market capitalization and first in Europe. As of December 31, 2011, LSE had a market capitalization of US$ 3.2666 trillion.

The London Stock Exchange is situated in the premises of Patemoster Square, near St Paul’s Cathedral and was founded in 1801. This exchange is owned by the London Stock Exchange Group.

History

Coffee House

The Royal Exchange was set up by Thomas Gresham based on the model of Antwerp Bourse, as a stock exchange. Then in 1571, Elizabeth I inaugurated the stock exchange.

In the 17th century, stockbrokers were not permitted to trade inside the Royal Exchange as they were considered ill mannered. Instead, they had to operate from other establishments in the surrounding area, notably Jonathan’s Coffee-House. At that coffee house, a broker named John Casting began listing the prices of a few commodities, exchange rates and certain key provisions such as salt, coal and paper in 1698. To begin with, this list was not published daily. Only few days of the week carried the exchange rate list.

This list and activity was soon after shifted to Garraway’s coffee house. Public auctions in this period were carried out for the period that a length of tallow candle could burn; these were known as “by inch of candle” auctions. As number of stocks increased, with new companies joining to tap capital from the market, the royal court also raised some monies. These are the first evidence of organized trading in marketable securities in London.

Royal Exchange

Royal Exchange

As Gresham’s Royal Exchange building was completely obliterated following the Great Fire of London, it was reconstructed and re-established in 1669. This new development was a move away from coffee houses and a step closer towards the modern model of stock exchange.

The Royal Exchange not only included brokers but also merchants and merchandise. This was the beginning of a regulated stock market. Earlier the Exchange used to operate amid scores of unlicensed brokers.

In order to regulate the exchange, Parliament enacted a regulation in 1697 that levied heavy penalties, both financial and physical to those brokering without a proper license. The regulation also fixed number of brokers (at 100), which was gradually increased as the size of the trade expanded. This, in turn resulted in many  problems of its own, one of which was that the traders had started leaving the Royal Exchange, either by their own discretion or through expulsion and had started dealing in the streets of London.

The street in which all traders carried out dealings was known as Change or Exchange Alley which was located close to the Bank of England. Parliament attempted to regulate this and forbid the unofficial traders from the Change streets.

As trading gathered pace, companies started to become a bit concerned due to “bubbles” as companies rose quickly and fell. Accordingly these companies convinced Parliament to pass a clause preventing “unchartered” companies from forming.

Following the Seven Years War (1756–1763), trade at Jonathan’s coffee house flourished.  Soon after in 1773, Jonathan, along with 150 other brokers, created a club and opened a new and more formal “Stock Exchange” in Sweeting’s Alley.

Traders were expected to pay the entrance fee, which permitted them to enter the stock room and trade securities. It was, though, not an exclusive place for trading, as trading also took place in the Rotunda of the Bank of England.

Frauds were also widespread during these times and in order to prevent such dealings, it was argued that users of the stock room pay an increased entry fee. This suggestion, however, was met with strong resistance and ultimately, the solution was reached in the form of annual fees and turning the Exchange into a Stock Subscription room.

The Subscription room formed in 1801 was the first ever regulated exchange in London, but the change was not received with readily by all parties. On the first day of trading, non-members had to be debarred by a constable.  Notwithstanding the chaos, a new and bigger building was envisaged, at Capel Court.

Then on 18 May, William Hammond laid the first foundation stone for the new building. Its construction was completed on 30 December when “The Stock Exchange” was incised on the entrance.

First Rule Book

During the initial years of operations, absence of set of regulations or fundamental laws made it difficult for Capel court trading. Consequently, in February 1812, the General Purpose Committee confirmed a set of recommendations, which later became the basis of the first codified rule book of the Exchange.

Although the document was not a comprehensive one by any means, topics as settlement and default were, in actual fact, were fairly exhaustive.

Amid new governmental regulations and ever expanding trading volume, the Exchange was gradually becoming a customary part of the financial life in the City. Regardless of drawing relentless criticism from newspapers and the public, the government used the Exchange’s organized market (and would most likely not have managed without) to raise the huge amount of money in the wars against Napoleon.

Foreign and regional exchanges

After the war ended and global economy started to recover leading to a boom, foreign lending to countries such as Brazil, Peru and Chile increased significantly. Notably, the Foreign Market at the Exchange made it possible for merchants and traders to participate as well and The Royal Exchange managed all transactions which involved foreign parties.

The ever-increasing number of overseas businesses meant eventually the dealing in foreign securities had to be allowed within all of the Exchange’s premises.

Just as London enjoyed its growth as a financial center, the domestic economy of Great Britain also benefited from the global economic boom. Cities such as Liverpool and Manchester showed great business development.

As a result, in 1836, stock exchanges were opened both in the Manchester and Liverpool. During this phase, stock-broking was considered as a real business profession, attracting many entrepreneurs.

However, the booms were also followed by bursts.

The Exchange before the World Wars

As stock market continued fascinating all the market participants, both scale and scope of the market increased.

By June 1853, both participating members and brokers were taking up such a large space that the Exchange was now becoming awkwardly crammed and, as a result, continual expansion plans were taking place. Even after extending the exchange from practically sides, rooms continued to appear overcrowded and it was felt the Exchange needed an entire new establishment.

Subsequently, Thomas Allason was appointed as the chief architect, and in March 1854 the new brick building inspired from the Great Exhibition stood ready. The new building had bigger floors, spacious surroundings.

During the mid 1800’s, many inventions were made such as telephone, ticker-tape and the telegraph.  These new technologies revolutionized the way the work was done in the exchanges.

Even though all major cities in Great Britain were linked domestically through telephone lines, managers at the Exchange were bit apprehensive of the telephone’s benefits and it was not installed before 1878.

The Exchange managers were concerned that whether new equipment would help in attracting or driving away the business. However, managers eventually decided to employ the new technology and soon after telephone became a crucial feature in stock market trading.

First World War

As London was the financial center of the world, it bore the maximum brunt during the First World War in 1914. Both the City of London and the Stock Exchange suffered badly.

To begin with, prices surged due to a growing fear that both borrowed money was to be called back and foreign banks would demand their loans or increase the rate of interest.

The decision of closing the Exchange for improving the infrastructure and extension of the August Bank Holiday to avert a run on banks was hurried through by the Committee and Parliament, respectively. The Stock Exchange was thus shut down from end of July until the New Year, prompting again the emergence of street business as well as on the “challenge system”.

The Exchange was expected to open again on 4 January 1915 under wearisome restrictions, as transactions were allowed only in cash. Due to this decision almost a thousand members left the Exchange between 1914 and 1918.

After the war ended and market participants returned to the trading floor, the mood, however was cowed, in general.

In 1923 the Exchange got its own Coat of Arms, with the motto “Dictum Meum Pactum”,( My Word is My Bond).

Second World War

In 1937, experiences from the First World War made officials at the Exchange chart out plans on how to effectively manage trading activities in a new war situation. One of the main worries was air-raids and the succeeding bombing of the Exchange’s premises. Shifting exchange to Denham was also thought as an option. This plan, though, never materialized. On the first day of September 1939, the Exchange closed its operations,  “until further notice” and two days soon after, the declaration of war was signed. However, the Exchange recommenced its operations six days later, on the 7th of September.

As the war continued for a second year, the concerns for air raids were greater than ever. In due course, on the night of 29 December 1940 one of the biggest fires in London’s history took place. The Exchange’s floor was hit by a clutch of chemical substances, which fortunately was extinguished swiftly. Trading on the floor was now considerably low and most was done over the phone to reduce the risks getting injured.

The Exchange was actually  shut down for only one more day during wartime, in 1945 due to some harm done by  a V2 rocket, where trading continued in the house’s basement.

Post-war

After some chaotic times, the stock market enjoyed some amazing years in the late 1950s and business was indeed flourishing. This prompted the officials to look out for a more appropriate space for its new accommodation. The construction work on the new Stock Exchange Tower commenced in 1967. The Exchange’s latest 321 feet high house had 26 storeys with Council and Administration at the top, and middle floors leased to affiliate companies. Queen Elizabeth II cut the ribbon at the opening of the new building on 8 November 1972, and the finalized structure was now a new City attraction, with its 23,000 sq ft trading floor.

1973 marked the year of some regulatory changes for the Stock Exchange. Firstly, two trading restrictions were to be ended. A report from the Monopolies Commission suggested that both women and foreign-born members should be allowed to trade on the floor. And secondly, in March the London Stock Exchange was to (formally) merge with the other 11 British and Irish regional exchanges. This development resulted in creation of a new position of Chief Executive Officer, who after extensive search, was given to Robert Fell.

Legislative changes also continued in 1991, when the governing Council of the Exchange was replaced with a Board of Directors drawn from the Exchange’s executive, customer and user base. This also marked the first time when the exchange name was changed to ‘The London Stock Exchange.’

FTSE 100 Index (Footsie 100) Index was introduced by the Financial Times and Stock Exchange partnership in February 1984. This development later turned out to be one of the most important indices of all as it kept a track on the movements of the 100 leading companies listed on the Exchange.

“Big Bang”

The most remarkable development of the 1980s was the abrupt deregulation of the financial markets in the UK in 1986. The phrase “Big Bang” was coined to express the sudden changes in regulations that included closing down of fixed commission charges and of the distinction between stockjobbers and stockbrokers on the London Stock Exchange, along with a shift from a traditional open-outcry to electronic, screen-based trading.

In 1995 The Exchange introduced the Alternative Investment Market, the AIM, to make it possible for growing companies expanding in international markets. Two years thereafter the Electronic Trading Service (SETS) was launched, bringing higher speed and efficiency to the market.

Just after this, the CREST settlement service was also introduced. In the year of the new millennium, 2000, the Exchange’s shareholders voted to become a public limited company: London Stock Exchange plc. The LSE also transferred its role as UK Listing Authority to the Financial Services Authority (FSA- UKLA)

EDX London, a partnership between OM Group and London Stock Exchange, created a new international equity derivatives business in 2003. The Exchange also bought Proquote Limited, a supplier providing real-time market data and trading systems.

Activities

Primary markets

Issuer services allow firms from around the world to join the London equity market with the aim of gaining access to capital market. The LSE makes it possible for a company to tap money, enhance their profile and attain a market valuation through a range of routes, thereby following the firms throughout the whole IPO process.

The London Stock Exchange includes several types of markets for listing, providing ideal platform for different sized companies to list. International companies can list numerous products in London including shares, depositary receipts and debt, presenting different and cost-effective ways to generate capital. In 2004 the Exchange began a Hong Kong Office and subsequently it attracted more than 200 listings from companies belonging to the Asia-Pacific region.

The exchange also includes “Premium Listed Main Market” for the biggest companies. This operates a Super Equivalence method where conditions of both the UK Listing Authority and the London Stock Exchange’s own criteria have to be fulfilled. The largest IPO (Initial Public Offering) on the Exchange was successfully ended in May 2011 by Glencore International plc. The global commodity trading company raised $10 billion at admission, making it one of the largest IPO ever.

For the smaller SME’s, the Stock Exchange runs the Alternative Investment Market (AIM). For those international companies that are not from the EU, the exchange offers the Depository Receipt (DR) scheme as a way of listing and raising capital.

Some of the benefits of joining one of the Exchanges markets are:

– making capital available for growth and tap funds for further development

– Both increasing the shareholder base and developing a market for the company’s share

– To discern the actual market value of company’s business

There are also two specialized markets:

Professional Securities Market This market helps raising the capital through the issue of specialist debt securities or depositary receipts (DRs) to seasoned investors. The market operates as a Recognized Investment Exchange, and by July 2011 it facilitated trade in 32 DRs, 108 Eurobonds and over 350 Medium Term Notes.

Specialist Fund Market Is the London Stock Exchange’s highly focused market, designed to trade more sophisticated fund vehicles, governance models and security. Trading in these vehicles is appropriate only for institutional, professional and highly knowledgeable investors. The Specialist Fund Market is an EU Regulated Market and thus securities entering in this market are entitled for most investor mandates, providing a pool of liquidity for issuers admitted to the market.

Secondary markets

The investment vehicles available for trading on the London Stock Exchange are:

• Ordinary Shares
• Exchange Traded Funds
• Exchange Traded Commodities
• Covered Warrants
• Structured Products
• Bonds
• Retail Bonds
• Global Depositary Receipts (GDRs)

There are two major markets on which companies trade on the LSE:

• Main Market

The Main market includes some of the most well-established, biggest and most admired companies in the world.  More than 1,300 companies from 60 different countries have listed on the London Stock Exchange since these companies find ample liquidity and globally-respected standards of regulation and effective corporate governance.

Approximately £366 billion has been raised during past ten years via IPOs and further issues already listed companies on the LSE.  The FTSE 100 Index (“footsie”) is one of the most followed stock market barometer of the world. This index includes the 100 most highly capitalized UK companies.

Alternative Investment Market (“AIM”)

The Alternative Investment Market of LSE is an international market for smaller but growing companies.  Businesses at different stages such as early stage, growth stage, venture capital backed companies along with more established companies use AIM to tap capital needed for their growth.

The AIM falls within the categorization of a Multilateral Trading Facility (MTF) as defined under the MiFID decree in 2004.  AIM is a very flexible market with no complexities involved during the admission process for companies, wanting to be publicly listed.

There are also numerous electronic platforms on which these multiple products trade.

– SETS (Stock Exchange electronic Trading Service) SETS is the London Stock Exchange’s highly technologically developed order book which trade indexed securities such as (FTSE100, FTSE250, FTSE Small Cap Index constituents, Exchange Traded Funds, Exchange Trading Products along with other liquid AIM, Irish and London Standard listed securities)

– SETSqx (Stock Exchange electronic Trading Services – quotes and crosses) SETSqx is trading platform for securities that are not as liquid as those traded on SETS. This platform combines a periodic electronic auction book four times a day with separate non-electronic quote driven market making.

– SEAQ SEAQ is the London Stock Exchange is a trading platform where trades are executed non-electronically. This service allows market makers to quote prices in AIM securities and the Fixed Interest market.

• International Trading Service

– IOB: The International Order Book provides easy and cost effective access for traders contemplating to invest in fast growing economies; for instance, in Central and Eastern Europe, Asia and the Middle East via depositary receipts (DRs). This service is based on an electronic order book similar to SETS.

– European Quoting Service: the European Quoting Service is a service that helps clients fulfilling their pre-trade pan-European transparency obligations.

– A pan-European trade reporting service that helps clients to completing their post-trade reporting obligations whether trading on or off Exchange.

• Derivatives

The trading of derivatives products is also made possible through LSE’s, the Turquoise platform (ex EDX London). The available products include Norwegian Futures and options on Norwegian single stocks and indices, Russian futures and options on the most liquid IOB Depositary Receipts, Futures and options on the FTSE RIOB index along with futures on the FTSE 100. Futures and options on the most liquid European stock as well as on European benchmark indices were expected to be launched in Q4 2011. As of Q1 2012 it was subject to FSA approval.

• Fixed Income

MTS (Mercato Telematico di Stato)

MTS is a fixed income trading electronic platform.  This platform helps trading European government bonds, quasi-government bonds, corporate bonds, covered bonds and repo. Through MTS, a debtor can access to both cash and repo markets in addition to fixed income market data and fixed income indices. The majority share is owned by the London Stock Exchange Group.  Some other shareholding firms include large international banks such as J.P. Morgan, Deutsche Bank and BNP Paribas.

The largest products offered are:

– MTS Cash – MTS “BondVision”  (Dealer to Client electronic market) – MTS Repo – MTS Credit (for euro-denominated non government bonds) – MTS Data – MTS Indices

Back in 1 February 2010, ORB introduced the Order book for Retail Bonds (ORB), offering nonstop two-way pricing for trading in UK gilts and retail-size corporate bonds on-exchange. ORB is like an electronic secondary market for retail investors. In 2009 huge inflows into bond funds were seen, amounting to £10.7bn.  These inflows were driven almost entirely by retail investors (90% of total), with corporate bonds being the most favored-selling sector.

ORB provides an open and transparent market mode, appropriate for retail investors.  At present, there are five committed market makers responsible for quoting two-way prices in a range of retail bonds all through the trading day. New market models makes it possible for private investors w to see prices on-screen and trade in bonds in a similar way as they presently do for shares. This results in greater efficiency of electronic on-book execution and option to use straight-through-processing to settlement system.

The demand in Retail Bonds is mainly driven by cost-effectiveness, absence of complexity in transaction charging and standardization of the market structure. The main objective of ORB is to expand distribution for bonds by opening up these markets to private investors who may have earlier felt like getting barred from this market. This is now possible as ORB helps in increasing the accessibility of publication on offer, detailing the risks along with providing benefits involved in Retail Bonds, such as taxation.

New entrants into ORB have been able to generate plenty of funds, such as Places for People who were able to tap capital amounting £140 Million. This illustrates the benefit of using ORB one can have, even for non-bank smaller firms seeking to raise capital.

Information services

The LSE provides its participants with real time information on prices and trading data thereby bringing both transparency and liquidity through several services. Feeds are also accessible through financial news providers such as Bloomberg and Thomson Reuters. Some of the products and references offered by the London Stock Exchange are:

• Unavista –  This is LSE’s business solution for Post-Trade Services, Data Solutions and Reconciliations. It provides customers a inclusive hosted platform for integrating matching, validation and reconciliations.
• RNS – Regulatory News Service is both a regulatory and financial communications medium for companies which help communicating with the professional investor. Approximately 175,000 announcements are processed by RNS every year.
• Proquote – This is the London Stock Exchange’s data provider and information display system. Its service include both Pre and Post trade Execution Monitoring and Analysis tools.

Change of Location

The old Stock Exchange Tower became redundant following the introduction of some “Big Bang” measures, which deregulated many of the Stock Exchange’s activities, enabling increased use of computerized systems that allowed dealing rooms to take precedence over face to face trading. Thus, in 2004, the House shifted to a brand new headquarters in Paternoster Square, nearby St Paul’s Cathedral.

Post trade

The trades executed on the LSE are cleared on LCH.Clearnet, which is jointly owned by some banks, Euronext along with the London Metal Exchange.

Together with Exchange’s Italian arm, Borsa Italiana, the London Stock Exchange Group as a whole offers clearing and settlement services for trades through CC&G (Cassa di Compensazione e Garanzia) and Monte Titoli.

CC&G is the Groups Central Counterparty (CCP) and covers several asset classes throughout the Italian equity, derivatives and bond markets.  Turquoise derivatives are also being covered by CC&G. Monte Titoli (MT) is the pre-settlement, settlement, custody and asset services provider of the Group. MT operates both on-exchange and OTC trades with over 400 banks and brokers.

Technology

The LSE’s exiting trading platform is its own Linux-based version named “Millennium Exchange”.

The previous trading platform was based on Microsoft’s .NET Framework, was created by Microsoft and Accenture. Microsoft used the LSE software as a model of the supposed supremacy of Windows over Linux in the “Get the Facts” campaign,maintaining that the LSE system offered “five nines” reliability. For Microsoft, LSE was a good experience as it worked for highly visible exchange and having yet a fairly modest IT problem.

After going through extended downtime and fallibility the LSE announced in 2009 that it was contemplating to switch to Linux in 2010.

Then in October 2010, the London Stock Exchange claimed that the new Linux based trading system ,called as Millennium Exchange, had beat the world record for trade speed, with 126 microsecond trading times being recorded on the Turquoise dark pool trading venue and would go live on 1 November.

The system, which was created by “MillenniumIT”, a Sri Lankan IT company acquired by the LSE in 2009, was taken out of service following a 2-hour outage of the Turquoise venue on 2 November. The technical glitch was according to LSE officials caused by human fault that “may have occurred in suspicious circumstances.”

The Plans were to bring Millennium Exchange also on the core share trading platform in December. The LSE said that it was hoping the software would be ready for use again early in 2011.

In February 2011, the London Stock Exchange completed switching over to Linux. LSE chief executive Xavier Rolet claimed that the exchange, once a monopoly, would perform at record speed and stable trading thereby allowing the exchange to fight back against the fast erosion of its dominant market share by specialist electronic rivals.

M&A activity

Borsa Italiana

On the 23rd June 2007, the London Stock Exchange acknowledged that it had agreed on the terms of a suggested offer to the shareholders of the Borsa Italiana S.p.A. The amalgamation of the two companies formed a foremost diversified exchange group in Europe. The joint group was named the London Stock Exchange Group, but still continued to remain two separate legal and regulatory entities. One of the long-term plans of the merged company is to expand Borsa Italiana’s efficient clearing services to other European markets.

MTS

In 2007, following Borsa Italiana announcement that  its call option exercise right to buy full control of MBE Holdings, the merged Group would now control Mercato del Titoli di Stato, or MTS. This amalgamation of Borsa Italiana and MTS with the London Stock Exchange’s existing bond listing business, improved the range of covered European fixed income markets.

Turquoise

In 2009, the London Stock Exchange acquired Turquoise (TQ), a Pan-European MTF, and since combining with MillenniumIT’s software, it currently offers the fastest latency bar- which is second to none in Europe. At present, the speed of latency on Turquoise (as measured at the end of August 2011) is 97 micro seconds on average for 99.9% of trades. Originally, founded by a syndicate of nine banks, its majority is now owned by the London Stock Exchange Group. Currently shareholders consist of twelve leading Investment Banks.

Turquoise runs a Maker-taker fee scheme, 0.30 basis points for Aggressive traders and 0.20 rebates for Passive traders, creating liquidity. The market share of Turquoise as an MTF has jumped twofold over the past twelve months, up from 3% to 6%. There are at present 2000 securities, across nineteen countries on Turquoise. Unlike Broker-Dealer Crossing Networks, TQ does not single out as to who can trade on their platform.

NASDAQ bids

In December 2005, the London Stock Exchange turned down a £1.6 billion takeover offer from Macquarie Bank. The London Stock Exchange described the offer as “derisory”, a sentiment shared by shareholders in the Exchange. Soon after Macquarie took back its offer, the LSE received an unsolicited offer from NASDAQ valuing the company at £2.4 billion. This offer was also rejected. NASDAQ later withdrew its bid, and less than two weeks later on 11 April 2006, reached a deal with LSE’s largest shareholder, Ameriprise Financial’sThreadneedle Asset Management unit, to acquire that firm’s entire stake, which included 35.4 million shares, at £11.75 per share.

NASDAQ also acquired 2.69 million additional shares, leading to a total stake of 15%. While the seller of those shares was not revealed, it occurred concurrently with a sale by Scottish Widows of 2.69 million shares.

The developments were seen as an effort to compel LSE to the negotiating table, together with limiting the Exchange’s strategic flexibility.

Subsequent acquisitions increased NASDAQ’s stake to 25.1%, holding off competitors’ bids for a number of months.  According to United Kingdom financial rules, NASDAQ  was required to wait for a period of time before renewing its effort. On 20 November 2006, within a month or two of the end of this period, NASDAQ extended its stake to 28.75% and started a hostile offer at the minimum permitted bid of £12.43 per share, which was the highest NASDAQ had paid on the open market for its existing shares.  The LSE straight away rejected this bid, stating that it “substantially undervalues” the company.

NASDAQ changed its offer (characterized as an “unsolicited” bid, rather than a “hostile takeover attempt”) on 12 December 2006, stating that it would be able to cut the deal with 50% (plus one share) of LSE’s stock, rather than the 90% it had been seeking. The U.S. exchange did not, though, increase its bid. Many hedge funds had build up large positions within the LSE, and many managers of those funds, as well as Furse, maintained that the bid was still not reasonable. NASDAQ’s bid was made more complex because it had expressed its offer as “final”, which, under British bidding rules, limited their ability to raise its offer except under certain circumstances.

At the end of the day, NASDAQ’s offer was completely rejected by LSE shareholders. Having received acceptances of only 0.41% of rest of the register by the cut-off date on 10 February 2007, Nasdaq’s bid duly slipped.

Reacting to the news reporters, Chris Gibson-Smith, the LSE’s chairman, said: “The Exchange’s strategy has produced outstanding results for shareholders by facilitating a structural shift in volume growth in an increasingly international market at the centre of the world’s equity flows. The Exchange intends to build on its exceptionally valuable brand by progressing various competitive, collaborative and strategic opportunities, thereby reinforcing its uniquely powerful position in a fast evolving global sector.”

On 20 August 2007, NASDAQ said that it was abandoning its plan to acquire the LSE and consequently look for options to divest its 31% (61.3 million shares) shareholding in the company taking into consideration its unsuccessful takeover attempt.

In September 2007, NASDAQ decided to sell the majority of its shares to Borse Dubai, leading  the United Arab Emirates-based exchange with 28% of the LSE.

Proposed merger with TMX Group

On 9th February 2011, the London Stock Exchange Group stated that they had decided to merge with the Toronto-based TMX Group, the owners of the Toronto Stock Exchange, creating a joint entity with a market capitalization of listed companies equal to £3.7 trillion.

Xavier Rolet, who at present is CEO of the LSE Group, would have headed the new merged company, while TMX Chief Executive Thomas Kloet would have become the new firm president.

The London Stock Exchange, however, announced it was ending the merger talks with TMX on 29th June 2011 citing that “LSEG and TMX Group believes that the merger is highly unlikely to achieve the required two-thirds majority approval at the TMX Group shareholder meeting.”

Even though the LSE received the support from its shareholders, it failed to obtain the required support from TMX’s shareholders.

Miscellaneous

IRA bombing

On 20 July 1990 a bomb placed by the IRA which exploded in the men’s toilets behind the visitors’ gallery. The area had already been evacuated and no one was hurt.

Main figures

There are at present 2,938 companies listed from over 60 countries on the London Stock Exchange, of which 1151 are on AIM, 44 on the Professional Securities Market and 10 on the Specialist Funds Market.

By June 2011, the AIM included 56 companies as per country of operations from Africa, 41 from China, 26 from Latin America, 23 from Central & Eastern Europe and 29 from India & Bangladesh, making it one of the world’s foremost growth markets. Since its start in 1995, more than £67 billion have been raised on AIM.

The combined market value of these companies is £3.9 trillion.

While daily turnover traded in July 2011 stood at £4.4 billion (€5.0 billion), daily number of trades stood at 611,941. The LSE’s share of trading in the UK lit order book trading was 62.2%.

Opening times

Normal trading sessions on the main order- book (SETS) are between 08:00 and 16:30 every day of the week except Saturdays, Sundays and public holidays declared by the Exchange in advance. The detailed schedule is as follows:

1. Trade Reporting 07:15 – 07:50
2. Opening Auction 07:50 – 08:00
3. Continuous Trading 08:00 – 16:20
4. Closing Auction 16:30 – 16:35
5. Order Maintenance 16:35 – 17:00
6. Trade Reporting Only 17:00 – 17:15

The Exchange is closed on the following days: New Year’s Day, Easter, May Bank Holiday, Spring Bank Holiday, Summer Bank Holiday, and Christmas Day.