FTSE 100 is an index of the financial performance of the100 largest companies in the UK. The index, which is updated continuously, is considered a barometer of the stock market in the UK and a reflection of the overall health of the UK economy.
The companies in the FTSE 100 are selected by the FTSE Group, which owned 50% by the Financial Times magazine and 50% by the London Stock Exchange. The acronym is derived from Financial Times and Stock Exchange (and is pronounced “footsie”).
To be considered an FTSE 100 company, a company must report its quarterly performance to the FTSE Group, must be listed on the London Stock Exchange, and must meet certain other requirements such as level of liquidity. The FTSE also monitors a majority of the bonds held and given by these companies. The FTSE group then applies a formula which considers the daily stock performance and capital positions of the 100 companies to deliver a FTSE 100 index number for the day.
Companies that are not large enough to be in the top FTSE 100 may be classified in the FTSE 250 (the next 250 largest companies not including the FTSE 100) or the FTSE 500 (the next 500 largest companies not including the FTSE 100 or FTSE 250.)