The FTSE 100 (Financial Times Stock Exchange 100 Index) is a capitalisation-weighted index of the 100 largest publicly traded companies in the United Kingdom by market value. Created in 1984 with a base value of 1,000 points, the FTSE 100 serves as the primary benchmark for UK equity market performance and is widely used for index funds, derivatives, and performance measurement.

The FTSE 100 composition changes quarterly based on market capitalization rankings, with companies entering or leaving the index as their market values change. Index movements are influenced by UK economic data, political developments, currency fluctuations, and global market sentiment. FTSE 100 futures and options provide efficient tools for hedging UK equity exposure or speculating on market direction.

Real-world example: The FTSE 100 rises 2.5% to 7,800 points following positive UK inflation data and Sterling strength, attracting international investment flows into UK equities and triggering index fund purchases to match benchmark performance.