The London Stock Exchange

The London Stock Exchange is one of the world’s oldest stock exchanges and can trace its history back more than 300 years. Starting life in the coffee houses of 17th century London, the Exchange quickly grew to become the City’s most important financial institution. Over the centuries following, the Exchange has consistently led the way in developing a strong, well-regulated stock market and today lies at the heart of the global financial community.

After Gresham's Royal Exchange building was destroyed in the Great Fire of London, it was rebuilt and re-established in 1669. This was a move away from coffee houses and a step towards the modern model of stock exchange.

The Royal Exchange not only housed brokers but also merchants and merchandise. This was the birth of a regulated stock market, which had teething problems in the shape of unlicensed brokers. In order to regulate these, Parliament brought out an act in 1697 that levied heavy penalties, both financial and physical to those brokering without a licence. It also set a fixed number of brokers (at 100), which was later increased as the size of the trade grew. This invariably led to several problems of its own, one of which was that the traders had started leaving the Royal Exchange, either by their own virtues or through expulsion and had started dealing in the streets of London. The street in which they were now dealing was known as Change or Exchange Alley which was suitably placed close to the Bank of England. Parliament tried to regulate this and ban the unofficial traders from the Change streets.

Companies became weary of "bubbles" when companies rose quickly and fell, so they persuaded Parliament to pass a clause preventing "unchartered" companies from forming.

After the Seven Years War (1756–1763), trade at Jonathan's coffee house boomed again. In 1773, Jonathan, together with 150 other brokers, formed a club and opened a new and more formal "Stock Exchange" in Sweeting's Alley. This now had a set entrance fee, through which traders could enter the stock room and trade securities. It was, however, not an exclusive location for trading, as trading also occurred in the Rotunda of the Bank of England. Fraud was also rife during these times and in order to deter such dealings, it was suggested that users of the stock room pay an increased fee. This was not met well and ultimately, the solution came in the form of annual fees and turning the Exchange into a Stock Subscription room.

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