Did you ever wonder why the FTSE was established? I did so I had to investigate. Guess what I discovered? I found out that there were 5 key reasons for the FTSE’s implementation.

1. It was specifically designed for the creation of stocks, to index tracking funds, performance benchmarks and
ETF’s.

2. Helps to screen stocks for their liquidity in order to
ensure that they are equitable for trading.

3. The FTSE helps maintain that stocks are in fact free float weighted so that they can be sure that only stock
market quality opportunities end up in the FTSE.

4. That with all stocks the Capital and total return versions
available for each traded stock.

5. The index is calculated in accordance to the (ICB)
the Industry Classification Benchmark a global standard developed. In partnership with Dow Jones Indexes.

The most interesting part is that the FTSE indexes is managed thru a set of public rules and regulations. A committee is in charge of making sure the rules are followed. There are reviews of the FTSE which are in place to make sure that the rules are in fact being adhered to even when they are not being closely monitored. This is all for the safety of the investors and the investees. The FTSE market is a wonderful tool when used correctly which also means using it for what it was created for investing in stock. Happy trading takes on a whole new meaning once you see that the stock market itself has an actual reason and a set of rules to follow just like the rest of us.