UNIVERSITATEA ROMNO - AMERICAN

Facultatea de Relaii Comerciale i Financiar Bancare Interne i Internaionale

Dragomir Nicolae Manaila Alina Ungureanu Laurentiu

Intro and History

The London Stock Exchange Limited (LSE) is the world's oldest stock exchange and one of the top three stock exchanges in the world, after the New York and Tokyo exchanges. It was formed in 1773 by a group of stockbrokers who had been doing business informally in local coffeehouses. Its Headquarters is now in London, United Kingdom. Its Chairman is Christopher Gibson-Smith. It is lead by CEO Xavier Rolet. It has 1545 employees (as of 2010). In 1972 the Exchange moved to a new purpose-built building and trading floor in Threadneedle Street. Deregulation, sometimes known as "big bang", came in 1986 and external ownership of member firms was allowed for the first time. In 1995 the Alternative Investment Market was launched and in 2004 the Exchange moved again, this time to Paternoster Square. On 16 September 2009, the London Stock Exchange Group agreed to acquire Millennium Information Technologies, Ltd., a Sri Lankan based software company specializing in trading systems, for US $30m (18m). The acquisition was completed on 19 October 2009. On Wednesday 9 February 2011 TMX Group, operator of the Toronto Stock Exchange agreed to join forces with the London Stock Exchange Group in a deal described by TMX head Tom Kloet as a 'merger of equals' (though 8/15 board members of the combined entity will be appointed by LSE. The deal, subject to government approval would create the world's largest exchange operator for mining stocks. In the UK the LSE Group first announced it as a takeover, however in Canada the deal was reported as a merger. The London Stock Exchange however announced it was terminating the merger with TMX on 29th June 2011 citing that "LSEG and TMX Group believe that the merger is highly unlikely to achieve the required two-thirds majority approval at the TMX Group shareholder meeting"[14]. Even though the LSE obtained the necessary support from its shareholders, it failed to obtain the required support from TMX's shareholders. Following the merger with Borsa Italiana, the group is Europe's leading equities business, with 48% of the FTSEurofirst 100 by market capitalisation and with the most liquid order book by value and volume traded.

Rules and regulations

All London Stock Exchange member firms are bound by the Rules of the London Stock Exchange (that go by the name of the rules) and must ensure compliance with these. The rules were fully updated in 2007 in readiness for the introduction of the Markets in Financial Instruments Directive (MiFIDor the Directive). The revised Rulebook also aligned the rules more closely with the structure of the trading system and simplified them where possible to make them more user-friendly. The attractiveness of the Exchange's markets is maintained by providing an efficient and well regulated market place. As a Recognised Investment Exchange (RIE), the Exchange has to satisfy the requirements detailed in the Financial Services Authority's RIE and RCH (Recognised Clearing House) Sourcebook. Orderly markets are maintained via rules, guidance and through the monitoring of trading and market activity. Stock Exchange Notices disseminate amendments to market rules and guidance.

The FSA
The Financial Services Authority (FSA) is an independent non-governmental body, given statutory powers by the Financial Services and Markets Act 2000. The FSA was set up by government. The government is responsible for the overall scope of the regulatory activities and powers. The FSA are operationally independent of government and are funded entirely by the firms they regulate. It is an open and transparent organisation and provide full information for firms, consumers and others about our objectives, plans, policies and rules. It regulates most financial services markets, exchanges and firms, setting the standards that they must meet and taking action against firms, if they fail to meet the required standards.

Primary markets
The London Stock Exchange runs several markets for listing, giving an opportunity for different sized companies to list. International companies can list a number of products in London including shares, depositary receipts and debt, offering different and cost-effective ways to raise capital. In 2004 the Exchange opened a Hong Kong Office and has attracted more than 200 companies from the Asia-Pacific region.
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For the biggest companies exists the Premium Listed Main Market. This operates a Super Equivalence method where conditions of both the UK Listing Authority as well as London Stock Exchanges own criteria have to be met. In terms of Small and Medium Enterprises (SMEs) the Stock Exchange operates the Alternative Investment Market (AIM). For international companies that fall outside of the EU, it operates the Depository Receipt (DR) scheme as a way of listing and raising capital. There are also two specialised markets: Professional Securities Market. This market facilitates the raising of capital through the issue of specialist debt securities or depositary receipts (DRs) to professional investors. The market operates under the status as a Recognised Investment Exchange. Specialist Fund Market. Is the London Stock Exchange dedicated market, designed to accept more sophisticated fund vehicles, governance models and security. It is suitable only for institutional, professional and highly knowledgeable investors. The Specialist Fund Market is an EU Regulated Market.

Information services
The LSE supply its participants with real time prices and trading data creating the transparency and liquidity through several services. Feeds are also available through providers such as Bloomberg and Thomson Reuters. Some of the products and references provided by the London Stock Exchange are:

Unavista LSEs business solution for Post-Trade Services, Data Solutions and Reconciliations. It offers customers a global hosted platform for integrating matching, validation and reconciliations. RNS Regulatory News Service is both a regulatory and financial communications channel for companies to communicate with the professional investor. Around 175,000 announcements are processed by RNS each year. Proquote the London Stock Exchanges data provider and information display system. It offers both Pre and Post trade Execution Monitoring and Analysis tools.

Final thoughts

The London stock exchange was and is a vital institution on the capital market. It is expanding and ever growing. It will continue to be the best stock exchange group in Europe for a very long time to come.