A stock exchange is a marketplace where stockbrokers and traders buy and sell securities, including stocks, mutual funds and exchange-traded funds, bonds, derivatives and so on. There are 60 stock exchanges across the globe and most of which host thousands of listed companies.

In this article we will take a brief look at one of the world’s most famous and successful stock exchanges – the London Stock Exchange.

London Stock Exchange is based in the City of London, England, UK and is where the majority of UK based companies are traded. Its premises can be found in Paternoster Square close to St Paul's Cathedral in the City of London.

The London Stock Exchange is one of the oldest exchanges in the world. It is part of London Stock Exchange Group (LSEG) which was formed in 2007 when the London Stock Exchange merged with the Milan Stock Exchange, Borsa Italiana.

As well as being one of the oldest stock exchanges in the world, it is also one of the busiest and most valuable. As of March 2021, the total market value of all companies trading on the London Stock Exchange was £3.8 trillion.

There are two principle markets on which companies trade on the LSE:

Main Market

The main market houses over 1,300 large companies from 60 different countries. Generally, when referring to the FTSE, most people mean the FTSE 100 which is the index of the 100 largest companies listed on the London Stock Exchange (LSE). These include companies such as Rolls Royce Holdings PLC, National Grid PLC, Unilever PLC, Royal Mail PLC and other well-know, large companies. The FTSE 250 is the next largest 250 companies listed on the LSE’s MAIN market and the FTSE 350 simply refers to both the FTSE 100 and the FTSE 250.

Alternative Investment Market (AIM)

LSE also hosts The Alternative Investment Market which is LSE's international market for smaller companies. A wide range of businesses seek to join the AIM in order to access growth capital. These include early-stage, venture capital-backed and more-established companies. The AIM is classified as a Multilateral Trading Facility (MTF) under the 2004 MiFID directive, and as such it is a flexible market with a more simple admission process for companies seeking to be publicly listed.

Secondary markets

Below is a list of the securities available for trading on London Stock Exchange:

• Common stock
• Bonds, including retail bonds
• Derivatives
• Exchange-traded funds
• Debt securities
• Exchange-traded commodities
• Structured products
• Covered warrants
• Global depositary receipts (GDRs)
• Gilt-edged securities