Returning to the Square Mile after their festive break, the handful of men who gathered in a room at the Stock Exchange Tower in Old Broad Street 40 years ago today could not have imagined what they were about to set in train.

The low-key switch-on of a computer programme on January 3, 1984 heralded the birth of one of the UK's most recognisable business brands and, more than two years before Margaret Thatcher's momentous Big Bang deregulation, a notable City of London modernisation.

The FTSE 100 has travelled a long way since the minute-by-minute performance of London's 100 largest qualifying stocks was first calculated as a single figure. 

First of all its value has soared, from an arbitrary 1,000 points on day one to a peak of 8,047.06 points during trading on February 16, 2023.

The Footsie, as it quickly became known, has also earned global fame. 




The FTSE 100 was created in 1984, when a computer programme allowed the minute-by-minute performance of London' 100 top stocks to be calculated as a single figure

It is a byword for money, power and - crucially during financial crises or political turmoil - confidence, its movement often quoted in British News Today bulletins as shorthand for that day's overall business performance.

And it has developed enormous cachet for its 100 members, a corporate club that has changed markedly in four decades. Gone are the classic conglomerates of 1984 such as Bass, Bowater and GEC.

In their place are international miners such as Fresnillo and internet platforms like Ocado.

As they seek to lure the next generation of blue chips, UK politicians and exchange bosses hope joining the FTSE continues to be part of the attraction.

But the broad awareness it commands today was never the intention of those that invented the index. In fact, for the first few weeks of its life it wasn't even called FTSE.




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Eager to earn a slice of the developing market for options trading, the London Stock Exchange had borrowed an idea from the Chicago Board Options Exchange (CBOE) by creating a contract around an index, instead of a handful of individual stocks. 

The London International Financial Futures and Options Exchange (LIFFE), which had launched with great razzmatazz in 1982, also needed new products to sustain interest.

But before they could launch anything, someone needed to construct a new index.

All that existed at that time was the FT 30, which had been compiled by the Financial Times since 1935 from prices scribbled by hand on the exchange floor and promoted assiduously in its salmon-pink pages.

Updated only hourly from a set of 30 largely industrial stocks, it was not fit for purpose when it came to the sophisticated world of financial derivatives.

The exchange's enterprising IT department quietly set about designing the first index in its 182-year history, with some help from the team at the stockbroker W Greenwell & Co, actuaries and academics.




Opting in: The London Stock Exchange borrowed an idea from the Chicago Board Options Exchange by creating a contract around an index, instead of a handful of individual stocks

When it found out about the plan in autumn 1983, the FT was apoplectic. Coverage in its pages was scant when the 100-Share Index - or Stock Exchange (SE) 100 - launched and was made available to all subscribers of the exchange's electronic information system, Topic.

There followed a remarkable lobbying campaign to get the FT involved, led by the deputy editor Richard Lambert, who would go on to edit the paper from 1991. LIFFE and the exchange boss Sir Nicholas Goodison saw some upside to a collaboration - and also feared hostile coverage.

The FT struck a deal to publish and support the 100-Share Index, but only if it changed its name. Never mind SEFT, the letters ‘FT' had to go first, newspaper bosses insisted.



Today the home of big businesses has become one itself. The FTSE 100 is just one index among hundreds of index families run by FTSE Russell, a division that is wholly owned by the London Stock Exchange Group (LSEG) since it bought out the FT's owner in 2011 and expanded internationally.

These families enable investment to be grouped by country, asset class, industry, size, strategy or environmental, social, and corporate governance (ESG) credentials.

The investment industry has adopted indices as performance benchmarks. Demand for FTSE data has also exploded because of so-called passive investing: the trend for tracking an index, instead of trying to beat it.

With trillions of dollars invested against their products, some regulators wonder if the $5bn-a-year market for financial index provision has gone beyond acting as a mere supplier of information.

After all, its slicing and dicing of data appears endless. There exists 3.3m indices globally, despite fewer than 60,000 stocks in the world.


James Ashton is chief executive of the Quoted Companies Alliance and co-wrote FTSE: The Inside Story with FTSE's founding chief executive Mark Makepeace.




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