of shares, but its advanced trading systems mean it is also one of the most modern. It is the world’s leading marketplace for international shares – more international companies choose to list in London than on any other exchange. It therefore plays a vital role in maintaining London’s position as a major financial centre.The main market is where most British and international shares are listed, while the Alternative Investment Market (AIM), established in 1995, is for younger and fast-growing businesses. Companies applying for a listing on the Exchange must provide a full picture of their operations, including their financial record, management and business prospects.As well as providing the marketplace to buy and sell shares, the Exchange is also the means through which companies and the Government raise money. The main types of share, or “security”, are: ordinary shares listed by British and foreign companies, known as equities; gilts – bonds issued by the Government to raise money to fund its spending; bonds issued by companies or local authorities; and Eurobonds, warrants and depository receipts – specialist securities favoured mainly by experienced investors.2.2 The Euromarket:This began with Eurodollars – US dollars lent outside the US – and has developed into a major market in a variety of currencies lent outside their domestic markets. London is at the centre of the Euromarket and houses most of the leading international banks and securities firms. Its share of trading in the two main types of bonds – Eurobonds and foreign bonds – is around 70 per cent of the market. The bonds are seen as flexible alternatives to bank loans. 2.3 Foreign exchange market:This market is dominated by financial institutions, which buy and sell foreign currencies, making a profit from differences between the exchange rates and rates of interest in the va...
