Understanding the data
Interpreting the data
This statistical bulletin, produced by the Office for National Statistics every 2 years, shows the ownership of ordinary shares in quoted companies in the UK at 31 December 2014.
Share ownership is measured using data from Euroclear (CREST), the electronic settlement system for equity share trading, and further analysis of share registers. Many of these shares (59% in 2014) are held in pooled nominee accounts with multiple ownership, or in the form of paper shares not on CREST. Some of the reference tables accompanying this bulletin show these shares separately; see the notes of these tables for details.
In order to identify the true beneficiary of multiple ownership pooled accounts, a sample of these accounts from company share registers were analysed. The analysis is further described in the methods section of the background notes. Paper shares are also assigned to a category of beneficial owner. All the tables and charts in this bulletin, and the remainder of the reference tables, are on this basis.
Care should be taken when making comparisons between years. In 1998 the survey switched to using data from the Euroclear (CREST) system which led to discontinuities. The largest impact was that some companies previously classified to unit trusts and investment trusts were from that point onwards classified as other financial institutions. This makes long-term trends in these sectors harder to identify. Note also that the analysis of pooled nominee accounts was not updated between 1998 and 2008. For each of these years the 1997 analysis was used to compile the results. The impact of this is discussed in the relevant sections of this bulletin.
Note that the share ownership analysis has not been carried out at uniform intervals and care should be taken when interpreting time series charts and tables in this publication.
Uses of the data
The main purpose of the share ownership estimates is to populate the financial accounts. The data are used to derive the asset breakdown for the transaction line "Quoted Shares" in the financial accounts and, in the absence of any other information, the transaction line "Unquoted Shares".
The main use of the data externally is to provide definitive or benchmark data on the ownership of shares in UK companies. Individual companies need to know who owns their shares but there is also an interest in ownership more widely and the implications for policy in, for example, growing overseas ownership or declining ownership by individuals. Our data provides this benchmark every 2 years.
We regularly engage with users to gain feedback on the data. A Share Ownership User Group was set up in 2012 to take key users and stakeholders through the methodology used to produce the results. We have also regularly consulted with users on a bilateral basis.
External users' main concerns with the data reflect the extent to which the published data differ from the industry view or outside analysis. Some users had commented that individuals owned a larger share of Alternative Investment Market (AIM) companies than those on the main market. AIM is the London Stock Exchange’s global market for smaller and growing companies.
With this in mind, the sample design was altered to increase the number of AIM companies selected. Table 4 shows beneficial ownership of FTSE 100, AIM companies and other listed companies.
Table 4: Holdings of FTSE 100, AIM and other quoted companies by beneficial owner
Download this table Table 4: Holdings of FTSE 100, AIM and other quoted companies by beneficial owner
.xls (29.2 kB)
These figures use the full sample of companies surveyed by Equiniti and Orient Capital to allocate pooled nominee accounts to beneficial owners, as the sample size is too small to use subsamples for each of the 3 groups. Therefore these figures should be regarded as indicative. However, the evidence suggests AIM companies are indeed owned to a greater extent by individual shareholders. However, because this study is conducted by value and AIM companies represent a small proportion (by value) of quoted shares of UK domiciled companies, they do not substantially affect the final results. We will continue to liaise with users to ensure that any differences in view are fully explored and reconciled.
Differences in definition may be a factor in explaining this difference in view. One such difference is the difference between the beneficial owner and the registered owner; another is that the scope of the UK Economic Accounts (and hence this survey) only includes companies domiciled in the UK. The size of the sample could also be a factor.
There is also some concern over the extent to which the data are comparable over time. As noted elsewhere, the analysis of pooled nominee accounts conducted in 1997 was not updated until 2010. This means that there are issues of comparability with the data for 1998 to 2008. This is made clear in the presentation of Figures 3 to 8 in the main part of the bulletin. The results for 2010, 2012 and 2014 are considered to be broadly comparable.
Definitions and explanations
American Depositary Receipt (ADR) programme: An ADR is a negotiable certificate denominated in U.S. Dollars issued by a U.S. bank representing a specified number of shares in a foreign stock traded on a U.S. exchange or Over-The-Counter (OTC) market.
Beneficial Owner: The true underlying owner of the share who receives the benefits of holding the share, for example income through dividends.
Buyback: The repurchase of shares by the issuing company in order to reduce the number of shares on the market.
Dematerialisation: Shares that are dematerialised are held in electronic form, rather than in paper form.
Excluded shares: These are shareholdings not held on the electronic share register but held instead in paper form, such as some share holdings of company directors.
FTSE 100: The FTSE 100 index is the most widely used UK stock market indicator. It tracks the performance of the top 100 companies, representing around 80% of the total market capitalisation of the London Stock Exchange. The index has a base level of 1000 on 3 January 1984.
Held in treasury: The portion of shares that a company keeps in their own treasury. Treasury stock may have come from a repurchase or buyback from shareholders or it may never have been issued in the first place.
Market Capitalisation: Total value of a listed company’s shares in issue, calculated as the number of shares multiplied by share price.
Multiple ownership pooled nominee accounts: One entry on the share register representing many beneficial owners from at least 2 different sectors. Therefore the electronic share register cannot give the complete breakdown of beneficial ownership sector: this must be established by means of a Companies Act 2006 Section 793 request.
Ordinary shares: An ordinary share gives the right to its owner to share the profits of the company (dividends) and to vote at general meetings of the company. They are the most common form of shares in the UK.
Quoted shares: Shares that are quoted on the London Stock Exchange. A quoted company is a company whose shares are quoted in this way.
Methods
Sampling methodology
For each Share Ownership Survey, a sample of companies is taken from a database obtained from the London Stock Exchange. The typical sample size is around 200, with the top 80 to 90 largest companies in terms of market capitalisation automatically selected and the remaining companies drawn with their probability of selection proportional to their capitalisation. This set up ensures a large coverage in terms of market capitalisation and reduces the need for a larger sample, which would add to the cost of carrying out the survey.
In 2014, the results are based on 198 companies, representing approximately 85% of the total value of UK listed shares (as set out in the UK Economic Accounts). The sample comprised the 88 largest companies and 110 smaller listed companies.
In a change to previous years, 30 of the 110 smaller companies were selected from the Alternative Investment Market (AIM). This was in response to user feedback that AIM companies had different patterns of ownership to main market companies. This is discussed in Section 2 of these notes.
For the sampled companies, the beneficial owners are obtained. Since 1998 data are acquired from Euroclear (CREST), the electronic settlement system for equity share trading. Each registered participant in CREST has to specify to which National Accounts category the beneficial holder of the shares belongs. This information is used to estimate the value of UK quoted shares by sector of beneficial owner on a particular date.
This list gives these sector categories, in line with the UK National Accounts:
Individuals
Charities, churches etc
Insurance companies
Pension funds
Investment trusts
Unit trusts
Banks
Other financial institutions
Non-financial companies
Central Government
Local Government
Public Corporations
Non-resident: owner in EU
Non-resident: owner outside EU
Multiple ownership: pooled nominees
Annex B provides more detail on the composition of each of the categories. The multiple ownership category covers all those accounts where the beneficial owners are from 2 or more of the categories listed above, and are referred to as pooled nominee accounts.
Additionally, there are excluded shares not held on CREST. These are shareholdings in material form, such as some shareholdings of company directors. This value is calculated as the difference between the total shares in issue on the London Stock Exchange and those held on CREST. A range of sources are used to identify any major shareholdings which are then assigned to the correct beneficial ownership sector.
The remaining excluded shares are allocated to 2 sectors – individuals (87.3% in 2014) and the rest of the world (12.7% in 2014). These percentages are based on analysis by Equiniti and Orient Capital.
Work on multiple ownership for the 2014 results
The work undertaken for the 2014 Share Ownership Survey followed the same basic methodology as the 2012 survey. This was explained in a note, Share Ownership Methodology, published in July 2013.
We continued our relationship with Equiniti and Orient Capital, who provided the analysis of multiple and single nominee accounts. We would like to thank Equiniti and Orient Capital for their work on the 2014 results.
Quality
The Quality and Methodology Information Report for Share Ownership is available on our website.
The quality of the share ownership results for 2014 is likely to be high. The sample is representative and covers a large proportion of shares in scope. The survey has benefited from the continuing input by Equiniti and Orient Capital, who are recognised experts in the field.
Sampling error
Sampling errors will arise when estimates are based on a sample rather than the whole population. In 2014, the Share Ownership Survey collected data from a sample of 198 companies, representing approximately 85% of total market capitalisation. The sample comprised the 88 largest companies and 110 smaller companies. Errors in the estimates will arise to the extent that the 110 small companies were unrepresentative of smaller companies in total, for example in the proportion of beneficial owners classified to the insurance sector.
Non-sampling error
Non-sampling error can arise due to errors in measurement and process. The primary data source for the Share Ownership Survey is CREST. Each registered participant in CREST has to specify, when setting up their account, to which National Accounts category the beneficial owners of the shares belongs. This information drives the allocation of the results and it is important that it is accurate and regularly maintained: We have previously worked with Euroclear to emphasise the importance of the sector allocation on CREST to clients and asking them to review their member account categorisation.
Non-sampling errors may also arise in the analysis of share registers. Identifying the true beneficial owners is a specialised undertaking and in recent years this task has been carried out by Equiniti (2010) and Equiniti and Orient Capital (2012 and 2014).
Revisions
There are some revisions to the previously published estimates for 2012. These are described in the main part of the bulletin.
Relevant links
MQ5: Investment by Insurance Companies, Pension Funds and Trusts
Public Sector interventions in the Financial Crisis
London Stock Exchange
Euroclear
Following ONS
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Publication policy
Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gov.uk
Accessing data
The complete run of data in the tables of this statistical bulletin is available to view and download in electronic format through ONS Time Series Data. Users can download the complete bulletin in a choice of zipped formats, or view and download their own selections of individual series.
Code of Practice for Official Statistics
National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference.
Code of Practice
The UK Statistics Authority has designated these statistics as National Statistics, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Practice for Official Statistics.
Designation can be broadly interpreted to mean that the statistics:
- meet identified user needs
- are well explained and readily accessible
- are produced according to sound methods
- are managed impartially and objectively in the public interest
Once statistics have been designated as National Statistics it is a statutory requirement that the Code of Practice shall continue to be observed.
Copyright and reproduction
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email: psi@nationalarchives.gsi.gov.uk
Annex A
The share ownership data are used to improve the sector breakdown of the ownership of shares in the National Accounts and to assign the dividends received to the correct sector of ownership. This use essentially defines the concept of beneficial ownership – the beneficial owner is the person or organisation who benefits from the dividends or increases in the share price.
The beneficial owner is not necessarily the person or organisation managing the shares or the registered owner whose name appears on the share register and on CREST. In particular, since the dematerialisation of shares in 1996 there has been a growing trend towards investors using pooled nominee accounts: at the end of 2014, 58.4% of the total value of UK shares was held by multiple ownership pooled nominees, or those where the beneficial owner was not known. In these cases, in order to identify the true beneficiary, further analysis needs to be conducted on the accounts.
The difficulties in identifying the beneficial owner can lead to differences between different outputs even where they are trying to measure the same thing (this is over and above any differences that might result from factors such as differing sample sizes). There are a number of holdings which are difficult to analyse conclusively and judgements sometimes need to be made based on the information available. This is why it is important to use the services of a specialist company in this area.
Other outputs can sometimes be measuring something different, such as economic exposure or interest. The ONS statistical bulletin MQ5: Investment by Insurance Companies, Pension Funds and Trusts also reports investment in UK quoted shares by insurance companies. The numbers can sometimes differ significantly from the figures reported here. The difference could in part be attributed to funds and other investment instruments run by insurance companies, which the 2014 Share Ownership Survey categorises as other financial institutions. In addition, the analysis of share registers to identify the true ownership of pooled nominee accounts classifies pension funds run by insurance companies as pension funds.
The analysis published in this Bulletin is a snapshot, taken at 31 December. At any one point in time shares might have been lent or sold but CREST may not have been updated in time for the snapshot; or CREST might have been updated where the change of ownership, although real, is only temporary. The following examples illustrate some of the difficulties in identifying or defining ownership:
- if a bank holds shares as a depository for an insurance company, then they should still be classified to the insurance sector as ownership will not have changed
- shares are regularly lent between sectors. In principle, these should be recorded under the sector borrowing the shares as ownership has changed. In practice, some depositaries disclose lent shares and it may not be possible to identify which shares have been lent. There is the further issue that if shares on loan are recorded as with the new owner, shares that move in the other direction should be treated in the same way; however, there may be an interest in recording the gross position, representing economic exposure or interest rather than ownership
- if the insurance sector puts up shares for collateral for a financial transaction it may not be clear who owns the shares. An example is where an open derivative position is held and the shares are used as collateral. The shares may be reregistered and then classified as other financial institutions but the beneficial ownership remains with the party that has lodged the collateral.
Annex B
Accounts should be classified according to the category of beneficial owner of the securities. Institutions or individuals that are not resident in the UK are classified to one of the two ‘overseas’ categories. For the purposes of this coding only, residents in Ireland, the Channel Islands and the Isle of Man are classed as ‘overseas’.
Pooled nominee accounts where the beneficial owners all fall into one of the categories listed below should be classified to that category. Otherwise, they should be classified to ‘multiple ownership: pooled nominees’.
The categories:
- Individuals: Includes holdings owned by individual persons resident in the UK (whether registered in their own name, through an Individual Savings Account (ISA), Self-Invested Personal Pension (SIPP) or tax-incentivised plan, or as customers of a stockbroker; shares held for employee share ownership schemes; and shares held in trusts with named individual beneficiaries
- Charities, churches etc.: Includes all private non-profit making bodies, including private trusts set up for charitable purposes, charities and holdings by universities and the church commissioners.
- Insurance companies: These are active in both life insurance and non-life (general) insurance.
- Pension funds: This includes local authority, public corporation and private pension funds. Pooled pension funds managed by insurance companies are now classified here rather than insurance companies.
- Investment trusts: Comprises authorised investment trusts and authorised closed-ended investment companies incorporated in the UK, including ISAs run by them.
- Unit trusts: Comprises authorised unit trusts, including ISAs run by unit trusts. Open-ended investment companies (OEICs) are now included in this category, rather than investment trusts as both unit trust and OEICs are open ended funds.
- Banks: Comprises institutions authorised as deposit takers by the Bank of England.
- Other financial institutions: This includes market participating holdings such as clearing accounts, market makers, stock lending and collateral accounts. This also includes funds such as index funds, exchange traded funds, hedge funds, socially responsible and ethical funds.
- Non-financial companies: Includes private limited companies (Ltd’s), public limited companies (PLC’s) and unincorporated partnerships, such as firms of accountants and solicitors. Corporations owned by central government or local authorities should be classified to public corporations.
- Central government: Includes government departments, government agencies and the Bank of England (including its issue department and banking department). Part of the “public sector” category in the final results.
- Local government: Includes holdings held directly by local authorities. Securities owned by local authority superannuation funds should be classified to pension funds. Part of the “public sector” category in the final results.
- Public corporations: Comprises corporations which, although owned by central government or local authorities, have substantial freedom to conduct their affairs on ordinary business lines. Securities owned by public corporation superannuation funds should be classified to pension funds. Part of the “public sector” category in the final results.
- Non-resident: owner in EU: All institutions or individuals resident in countries of the European Union other than the UK. Part of the “rest of the world” category in the final results.
- Non-resident: owner outside EU: All institutions or individuals resident in countries outside of the European Union. Also includes beneficial owners who are known to be resident abroad, but where the country of residence is not known precisely, and pooled nominee accounts where the beneficial owners are all non-residents but the split between EU and non-EU residents is not known. Part of the “Rest of the World” category in the final results.
Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gov.uk
