What is the Footsie

Footsie is slang for the Financial Times-Stock Exchange 100 Share Index (FTSE 100).

BREAKING DOWN Footsie

The Footsie is an index that tracks the 100 largest public companies by market capitalization that trade on the London Stock Exchange (LSE). The FTSE 100 represents more than 80 percent of the LSE’s market capitalization. FTSE is an acronym for the Financial Times and the LSE, its original parent companies. The FTSE is now owned and maintained by the London Stock Exchange Group. It has similar importance in London to the U.S. Dow Jones Industrial Average and S&P 500 and is a major indicator of the performance of the broader market.

The level of the FTSE 100 is calculated using the total market capitalization of the constituent companies and the index value. Total market capitalization changes with individual share prices of the indexed companies throughout the trading day, so the index value also changes. When the FTSE 100 is quoted up or down, it is measured against the previous day’s market close. It is calculated continuously on every trading day from 8:00 AM at the market opening until the 4:30 p.m. LSE close. A FTSE 100 decline means the value of the largest UK listed companies decreasing. The FTSE hitting a new high means the total worth of all the indexed companies increasing.

FTSE composition

The FTSE 100 was launched in 1984. Since then, its makeup has changed to reflect mergers and acquisitions as well as entering and exiting companies, underscoring its function as a barometer of market activity. A company need not be British to be in the FTSE but must be listed on the LSE. Because many of the listed companies are foreign-based or do most business overseas, the value of the pound is a factor as well. A weaker pound means a dollar-based company would be worth more in pounds, and a rising pound means companies doing business in Europe would earn less in the U.K.

The FTSE reviews the components of the FTSE 100 quarterly to ensure it includes the highest market cap companies. FTSE also researches and publishes many other indices that track a wide range of securities and financial instruments Other FTSE UK indices include the FTSE 250, which includes the next 250 largest companies after the FTSE 100 and the FTSE SmallCap, which includes the next smaller group of companies. The FTSE 100 and FTSE 250 make up the FTSE 350, and together with the FTSE SmallCap comprise the FTSE All-Share.