Abstract
Financial globalization has grown since the nineties. In 2004, the portfolios of British institutional investors contained 26% of foreign assets. In comparison, this rate was of 11% in the United States and 23% in Japan, which makes the LSE the biggest international Stock Exchange. Moreover, as the Stock Exchange capitalization increases from year to year, it is interesting to analyze in what way it contributes to the economy of both UK and Europe. Analyzing whether the LSE is an efficient market will allow us to identify the possible causes for the changes in the British market and suggest possible future scenario for the FT-SE 100, the Dow Jones and the CAC 40. To understand how the London Stock Exchange affects the economy, one must assess the importance of the LSE compared to the British and European economy. In 1995, the capitalization of the UK reached 1,346 billions of dollars, which was equivalent of nearly 8% of the world's capitalization. In 2005, the volume of transaction of domestic actions was of $ 5,176 billion, which was twice as much as that of Euronext.
