FTSE to trial early index

FTSE INTERNATIONAL, which manages and develops the FTSE equity indices, will begin live trials of a pre-market version of the FTSE 100 index on Monday.

The pre-market index is intended to provide an early guide to the opening level of the FTSE 100. It could help to stamp out the early morning volatility that has plagued the market since the launch of Sets, the Stock Exchange's electronic trading system.

Mark Makepeace, FTSE International's managing director, said: "This initiative is aimed at improving visibility on the order book at the critical opening period. I hope it will, over time, help to improve liquidity at the start of official trading."

FTSE International, in conjunction with Reuters, will calculate the pre- market level of the FTSE 100 using brokers' orders placed on the electronic order book prior to the official opening of the market at 9.00am.

Low volumes of trade at the beginning and the end of the trading day have meant that the FTSE 100 has been prone to erratic swings since the introduction of Sets last autumn.

The Stock Exchange has shortened market trading hours in an attempt to solve the problem of early morning volatility, although brokers say there is as yet little evidence of a marked improvement in price formation.