The London Stock Exchange or LSE is a stock exchange located in London, 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.
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 ofRussia, 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 centred 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.
Licensing of brokers
In 1697, a law was passed to "restrain the number and ill-practice of brokers and stockjobbers" following a number of insider trading and market-rigging incidents. It required all brokers to be licensed and to take an oath promising to act lawfully.
The South Sea Bubble
The Change Alley exchange thrived. However, it suffered a set-back in 1720.
Much excitement was caused by the South Sea Company, stoked by brokers, the company's owner John Blunt and the government. Having set up the unprofitable company nine years previously, the government hoped to wipe out the large debts accumulated by offering shares to the public.
Shares in the company, which had started at £128 each at the start of the year, were soon fetching as much as £1,050 by June. The bubble inevitably burst, with share prices plunging to £175, then £124.
The incident caused outcry, forcing the government to pass legislation to prevent another bubble, and it took a long time for the stock exchange to recover.
Threadneedle Street and Capel Court
Jonathan's burnt down in 1748, and this, plus dissatisfaction with the overcrowding in the Alley, made the brokers build a New Jonathan's on Threadneedle Street, as well as charging an entrance fee. The building was soon renamed the Stock Exchange, only to be renamed again as the Stock Subscription Room in 1801, with new membership regulations.
However, this too proved unsatisfactory, and the exchange moved to the newly built Capel Court in the same year. The exchange had recovered by the 1820s, bolstered by the growth of the railways, canals, mining and insurance industries (there were, however, problems with stags and dividend payments). Regional stock exchanges were formed across the UK. Bonds (or gilt-edged securities) also began to be traded.
Coat of Arms
It received its own Coat of Arms in 1923. Its motto is dictum meum pactum, "My word is my bond".
The Stock Exchange Tower
The former Stock Exchange Tower, based in Threadneedle Street/Old Broad Street was opened by Queen Elizabeth IIin 1972 and housed the Trading Floor where traders would traditionally meet to conduct business.
This became largely redundant with the advent of the Big Bang on 27 October 1986, which deregulated many of the Stock Exchange's activities. It eliminated fixed commissions on security trades and allowed securities firms to act as brokers and dealers. It also enabled an increased use of computerised systems that allowed dealing rooms to take precedence over face to face trading.
IRA bomb
On 20 July 1990 a bomb planted by the IRA exploded in the men's toilets behind the visitors' gallery. The area had already been evacuated and nobody was injured.[2] The long term trend towards electronic trading had been reducing the Exchange's status as a visitor attraction and, although the gallery reopened, it was closed permanently in 1992.
Paternoster Square
In July 2004, the London Stock Exchange moved from Threadneedle Street to Paternoster Square (EC4) close to St Paul's Cathedral, still within the "Square Mile" (the City of London).
It was officially opened by Queen Elizabeth II once again, accompanied by The Duke of Edinburgh, on 27 July 2004. The new building contains a specially commissioned dynamic sculpture called "The Source", by artists Greyworld.
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