Financial Centre - Comparisons

Comparisons

  • Wall Street. During much of the 20th century, the United States and its financial capital, New York City, were the leaders. But over the past few decades, with the rise of a multipolar world with new regional powers and global capitalism, numerous financial centres have challenged Wall Street's predominance, particularly from Asia which some analysts believe will be the focus of new worldwide growth. New York still has strengths in having a "concentration of finance professionals"—prime brokers, large banks, traders, lawyers, accountants, and private bankers. One analyst suggested the prime factors for success as a financial city were three:
  1. a pool of money to lend or invest
  2. a decent legal framework
  3. high-quality human resources
  • London. In the past decade the City of London has re-acquired the title of the world's economically powerful city after recovering from its downfall contributed by the Second World War. However, London has confronted new opponents since fast rising eastern financial centres (namely Hong Kong, Tokyo and Singapore) arise taking in the facts that differing tax rules and regulatory environments and so forth into account. There is a perception that "regulatory scrutiny is more burdensome in the United States than in London", which has a "transparent and reliable legal system."
  • Tokyo. One report suggests that Japanese authorities are working on plans to transform Tokyo but have met with mixed success, noting that "initial drafts suggest that Japan’s economic specialists are having trouble figuring out the secret of the Western financial centers’ success." Efforts include more English-speaking restaurants and services and the emergence of many brand new office buildings in Tokyo, but that have so far neglected more powerful stimuli such as lower taxes and a relative aversion to finance.
  • Hong Kong. In 2010, the Hong Kong Stock Exchange raised nearly $53 billion for initial public offerings, compared with only $42 billion for the U.S. and $16 billion (£10 billion) in London. Hong Kong was the site of the world's largest I.P.O. in 2006 of the $19.1 billion Industrial and Commercial Bank of China. Hedge funds are doing well in Hong Kong with increased growth from 2006 to 2010. One estimate in 2009 was that the Hong Kong stock market was the world's seventh largest and noted that 70 percent of the world's 100 largest banks were based in the city.
  • Singapore. This city was mentioned as a competitor given its proximity to Asian markets.
  • Chicago. The Illinois city has the "world’s largest derivatives market" when the Chicago Mercantile Exchange and the Chicago Board of Trade merged in 2007.
  • Shanghai. Official efforts have been directed to making Pudong a financial leader by 2010. Efforts during the 1990s were mixed, but in the early 21st century, Shanghai gained ground. Factors such as a "protective banking sector" and a "highly restricted capital market" have held the city back, according to one analysis in 2009 in China Daily. Shanghai has done well in terms of market capitalization but it needs to "attract an army of money managers, lawyers, accountants, actuaries, brokers and other professionals, Chinese and foreign," to enable it to compete with New York and London. China is generating tremendous new capital, which makes it easier to stage initial public offerings of state-owned companies in places like Shanghai.
  • Sydney. Australia's most populous city is a major financial and business services hub not only for Australia but for the Asia-Pacific region. The Sydney State Savings Bank building is located on Martin Place in the central business district, home to the Sydney Stock Exchange and an array of business headquarters.
  • Toronto. The city is a leading market for Canada's largest financial institutions and large insurance companies. It has also become one of the fastest growing financial centres following the late-2000s recession and the stability of the Canadian banking system. Most of the financial industry is concentrated along Bay Street, where the Toronto Stock Exchange is also located.
  • Others. Cities such as São Paulo and Johannesburg and other "would-be hubs" lack liquidity and the "skills base," according to one source. Financial industries in countries and regions such as the Indian subcontinent, Korea and Malaysia require not only well-trained people but the "whole institutional infrastructure of laws, regulations, contracts, trust and disclosure" which takes time to happen. *

New York Times analyst Daniel Gross wrote:

“ In today’s burgeoning and increasingly integrated global financial markets — a vast, neural spaghetti of wires, Web sites and trading platforms — the N.Y.S.E. is clearly no longer the epicenter. Nor is New York. The largest mutual-fund complexes are in Valley Forge, Pa., Los Angeles and Boston, while trading and money management are spreading globally. Since the end of the cold war, vast pools of capital have been forming overseas, in the Swiss bank accounts of Russian oligarchs, in the Shanghai vaults of Chinese manufacturing magnates and in the coffers of funds controlled by governments in Singapore, Russia, Dubai, Qatar and Saudi Arabia that may amount to some $2.5 trillion. -- Daniel Gross in 2007 ”

An example is the alternative trading platform known as BATS based in Kansas City which came "out of nowhere to gain a 9 percent share in the market for trading United States stocks." The firm has computers in New Jersey, two salespersons in New York City, but the remaining 33 employees work in a centre in Missouri.

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