There is "no question of the FT 30 index disappearing", opined the deputy chief executive of the Financial Times, arguing that the newfangled creation would sit happily alongside the paper's own FT 30, the pre-eminent barometer of the UK stock market since 1935.
It did not work out that way. The FTSE 100 grabbed attention from the off, just as its designers had intended. It was created by the London Stock Exchange and the early players in the futures and options market for the then emerging era of electronic trading and derivative products. A catchy shorthand - the Footsie - helped.
Companies' pure stock market capitalisations dictated weightings within the index, as they still do, ensuring mathematical discipline and easy replication. A total of 100 constituents, updated quarterly, was adopted not only for the sake of a round number but also because 100 stock symbols was the maximum that could be displayed on a single page of the new Topic electronic information terminals that the exchange was flogging.
The FT 30 did not stand a chance. Each stock in its narrow index was given equal weight, meaning weird upsets occurred if a single small company plunged in value. A selection based on a hand-picked sample of the UK economy, with prices updated only hourly, also felt woefully old-fashioned. In the era of privatisations and the big bang in 1986, the market wanted to trade more of everything listed in London.
Denne historien er fra January 02, 2024-utgaven av The Guardian.
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Denne historien er fra January 02, 2024-utgaven av The Guardian.
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