Edinformatics Home ____{main}
Today is
Investor Resources

INVESTOR EDUCATION DIRECTORY

FINANCIAL INSTRUMENTS...

TECHNICAL ANALYSIS...

INVESTOR EDUCATION...MORE


STOCKS AND BONDS

OPTIONS RESEARCH

DAY TRADING
BIOTECHNOLOGY
SMALL CAP RESEARCH
HEDGE FUNDS
NANOTECHNOLOGY
COMMODITIES AND FUTURES
HOME PAGE
Career Resources
What are the fastest growing careers?
What Goes into a Resume
Job Interview Tips

Job Search Methods

 

 

 

 

INVESTOR EDUCATION

London Exchange
(LSE)



The London Stock Exchange or LSE is a stock exchange located in London, England, United Kingdom. Founded in 1801, it is one of the largest stock exchanges in the world, with many overseas listings as well as British companies.

The LSE is part of the London Stock Exchange Group plc. Its current premises are situated in Paternoster Square close to St Paul's Cathedral in the City of London.

 

History

Origin of share trading -- The trade in shares in London began with the need to finance two voyages: The Muscovy Company's attempt to reach China via the White Sea north of Russia, and the East India Company voyage to India and the east.

Unable to finance these costly journeys privately, the companies raised the money by selling shares to merchants, giving them a right to a portion of any profits eventually made.

Exchange

The idea soon caught on (one of the earliest was the Earl of Bedford's scheme to drain the fens). It is estimated that by 1695, there were 140 joint-stock companies. The trade in shares was centered around the City's Change Alley in two coffee shops: Garraway's and Jonathan's. The broker, John Castaing, published the prices of stocks and commodities called The Course of the Exchange and other things in these coffee shops.

Nasdaq

In December 2005, the London Stock Exchange rejected a £1.6 billion takeover offer from Macquarie Bank. The LSE described the offer as "derisory", a sentiment echoed by shareholders in the exchange. Shortly after Macquarie withdrew its offer, the LSE received an unsolicited approach from NASDAQ valuing the company at £2.4 billion. This too it duly rejected. NASDAQ later pulled its bid, and less than two weeks later on April 11, 2006, struck a deal with LSE's largest shareholder, Ameriprise Financial's Threadneedle Asset Management unit, to acquire all of that firm's stake, consisting of 35.4 million shares, at £11.75 per share.[3] NASDAQ also purchased 2.69 million additional shares, resulting in a total stake of 15%. While the seller of those shares was undisclosed, it occurred simultaneously with a sale by Scottish Widows of 2.69 million shares.[4] The move was seen as an effort to force LSE to the negotiating table, as well as to limit the LSE's strategic flexibility.[5]

Subsequent purchases increased NASDAQ's stake to 25.1%, holding off competing bids for several months.[6][7][8] United Kingdom financial rules required that NASDAQ wait for a period of time before renewing its effort. On November 20, 2006, within a month or two of the expiration of this period, NASDAQ increased its stake to 28.75% and launched 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.[9] The LSE immediately rejected this bid, stating that it "substantially undervalues" the company.[10]

NASDAQ revised its offer (characterized as an "unsolicited" bid, rather than a "hostile takeover attempt") on December 12, 2006, indicating that it would be able to complete 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, however, raise its bid. Many hedge funds had accumulated large positions within the LSE, and many managers of those funds, as well as Furse, indicated that the bid was still not satisfactory. NASDAQ's bid was made more difficult because it had described its offer as "final", which, under British bidding rules, restricted their ability to raise its offer except under certain circumstances.

In the end, NASDAQ's offer was roundly rejected by LSE shareholders. Having received acceptances of only 0.41 per cent of rest of the register by the deadline on 10 February 2007, Nasdaq's offer duly lapsed[2]. Responding to the news, Chris Gibson-Smith, the LSE's chairman, said: "The Exchanges 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 worlds 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."[11]

On Monday, 20 August 2007, NASDAQ announced that it was abandoning its plan to take over the LSE and subsequently look for options to divest its 31% (61.3 million shares) shareholding in the company in light of its failed takeover attempt.[12] In September 2007, NASDAQ agreed to sell the majority of its shares to Borse Dubai, leaving the United Arab Emirates-based exchange with 28% of the LSE.[13]

Structure

The LSE is broken down into the Main Market and Alternative Investments Market (AIM), as well as EDX London (which handles derivatives). The independent FTSE Group maintains a series of indices for measuring the LSE, including the FTSE 100 Index, FTSE 250 Index, and FTSE 350 Index.

 

References


All text is available under the terms of the GNU Free Documentation License (see Copyrights for details). Disclaimers. Wikipedia is powered by MediaWiki, an open source wiki engine.


Questions or Comments?
Copyright 1999 EdInformatics.com
All Rights Reserved.