The United Kingdom is home to some of the oldest and most developed financial markets in the world, with London generally being considered one of the three ‘command centers’ of the global economy (along with New York City and Tokyo). While the UK is the sixth
(behind the U.S. and Japan). The country also houses the
, and is the biggest derivatives market for off-exchange derivatives.
The London Stock Exchange
Tracing its roots back to the late 16th century, the London Stock Exchange (LSE) was founded in 1801 and therefore operated at the time when Britain was the world’s preeminent economic and imperial power. In 2007 the LSE acquired the Milan Stock Exchange, in the process creating a new company, the London Stock Exchange Group, which is presently the ninth
largest stock market operator in the world. A large part of the appeal of the LSE is its international character, with some of the
largest companies trading on the LSE being multinational giants like Japanese carmaker Toyota, French oil and gas company Total, and U.S. companies such as General Electric. The primary index tracking the
development of the LSE is the FTSE 100, which is comprised of the 100 largest qualifying UK companies by market capitalization.
The UK bond market
Indeed, London has been a financial leader since the 19th century, pioneering many of the financial innovations that emerged through the industrial revolution. This focus on innovation has continued into the 20th and 21st centuries, with the U.K. generally being considered one of the
leading international debt capital markets today. The U.K. is home to the gilt, or “gilt-edged security”. This is a government liability denominated in sterling, issued by the HM Treasury. Gilts come in two primary forms; conventional gilts, being the more basic form of UK government bonds, as they are more widely traded by investors and make up the largest proportion of
issued government bonds market. The second type of gilt is the index-linked gilt. The U.K. was one of the earliest developed economies to issue index-linked bonds to institutional investors. This bond type differs as it has semi-annual coupon payments and the principal repayments are adjusted in line with the UK Retail Prices Index (RPI) with a lag.
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