The FTSE 100 Index is the most widely followed UK stock market index. It is comprised of the top 100 UK listed companies, ranked by market capitalisation. Together, they account for more than 80% of the value of all the companies listed on the London Stock Exchange. It is sometimes referred to as the UK 100 by financial spread betting and CFD trading companies.
How can you trade the FTSE 100?
The FTSE 100/UK 100 is readily available to traders online as a spread bet, CFD or ETF product. It does not, however, provide comprehensive exposure to companies with a strong UK bias, as many large international corporations are included in the index. Typical examples include HSBC (global banking giant), Royal Dutch Shell (Netherlands oil company), Xstrata (Australian miner) and Antofagasta (Chilean miner).
Many foreign or global companies like to list in London as this helps them to raise capital via a UK share issue. The FTSE 100 in effect reflects the prices of the biggest companies listed in London, regardless of nationality.
The index uses a free float methodology to determine the impact of individual share prices on the daily performance of the index. This means only shares that are being traded freely count towards the capitalisation figure, not shares held by insiders or other strategic shareholdings.
The components of the index are reviewed every quarter. Companies in the FTSE 250 index, which have reached a capitalisation that would place them in the top 90 companies in the FTSE 100 Index, are promoted into the index.
At the time of writing, the largest five companies in the index were HSBC, Royal Dutch Shell, Vodafone Group, and GlaxoSmithKline.
The index opens at 08.00 UK time, and closes at 16.30. Some market makers will continue to quote prices on this index both in advance of the opening time, and after closing time, as there are also futures contracts available to trade outside normal trading hours.
The FTSE 100 is also a popular index for use with index-linked investment products, including guaranteed products, that are frequently sold by retail banks.Advertisement