The London Stock Exchange formally blessed information technology last week with the first full-sector listing for IT stocks.

The new sector includes 113 companies, such as Misys, Sema, Psion and ARM, and accounts for around 1.5% of the total value of the stock market.

The firms are subdivided into six categories: hardware, services, Internet, software, semiconductors and telecoms.

Before being given a separate listing in 1998, software and IT services firms were listed alongside services companies such as Hays and Rentokil; hardware firms were grouped with suppliers of electronic and electrical equipment.

But the pre-Easter launch was dogged by criticism that the listing has come late and is muddled by arbitrary internal divisions.

George O'Connor, analyst at investment bank Granville, welcomed the launch of the new sector, but cautioned: 'There's a danger this has come too late with the UK losing ground to foreign rivals. The sub-sectors created are of very little value to investors: two are large; the other four are tiddlers.'

The criticisms were echoed by Alex van Someren, managing director of nCipher, a privately held UK encryption hardware specialist.

'It's a step in the right direction, but not enough. The American exchange Nasdaq has much greater readiness in dealing with the revenue variations which occur in high-tech start-ups,' added Van Someren.