FTSE 100 Index (FTSE)
The FTSE 100 Index, also called FTSE 100, FTSE, or, informally, the “footsie” /ˈfʊtsiː/, is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. It is one of the most widely used stock indices and is seen as a gauge of business prosperity for business regulated by UK company law. The index is maintained by the FTSE Group, a subsidiary of the London Stock Exchange Group.
The index began on 3 January 1984 at the base level of 1000; the highest value reached to date is 6950.6, on 30 December 1999. After falling during the financial crisis of 2007-2010 to below 3500 in March 2009, the index recovered to a peak of 6091.33 on 8 February 2011, fell under the 5000 mark on the morning of 23 September 2011, but reached 6,840.27 (its highest since September 2000) on 22 May 2013.
The index is maintained by the FTSE Group, a now wholly owned subsidiary of the London Stock Exchange which originated as a joint venture between the Financial Times and the London Stock Exchange. It is calculated in real time and published every 15 seconds when the market is open.
The Financial Times Stock Exchange 100 is a market capitalization weighted index representing the top 100 blue chip companies on the London Stock Exchange. The index is said to map more than 80% of the total capitalization in the United Kingdom. Stocks are free-float weighted to ensure that only the investable opportunity set is included within the index. The FTSE group manages the Index, which in turn is a joint venture between the Financial Times and the London Stock Exchange.
They involve the total market capitalization of the companies weighted by their effect on the index, so the larger stocks would make more of a difference to the index as compared to a smaller market cap company. This is also called the free float method. The basic formula for any index is (be it capitalization weighted or any other stock index).