In June 2012, London was the commerce centre of the world.
It rose to the top of a list of 50 cities created by MasterCard Inc. It beat out New York, Tokyo and Chicago. Banks in cities around the world tried to imitate London’s success, and looked to it for guidance and instruction.
According to a Mastercard report from 2012, London surpassed New York, one of its main competitors, in four of six areas:
- economic stability
- the ease of doing business
- volumes of financial flows
- attributes as a business centre.
In 2012 the total amount of money raised in Europe was 78 % greater than the value of US offerings, according to data compiled by Bloomberg.
The Global Financial Centre’s Index gave London a score of 785, with New York trailing behind by 20 points at 765.
Fast forward to 2014, and London has lost its place in the top spot. New York has beat out London by two points with a rating of 786 in the Global Financial Centre’s Index. London follows behind with a rating of 784, and Hong Kong comes in a distant third with 761.
What happened? Is New York really the centre of the financial world? If it is, who is its greatest challenger.
Jeremy: I think London still holds the real power. It was New York for a while, but I think it’s crossed over within the last 10 years back to London. Ask yourself, do the banks in Toronto emulate New York or London? Who do they have stronger ties with? London is historically more significant than the United States, I think they’re in a better Time Zone, and that’s a huge thing. When Toronto is still waking up, London has been working for six hours.
Devon: Do Ontarians put their head traders in London or New York?
The sun never sets on the British Empire or its financial prowess it seems. Like Jeremy said, their time zone is ideal for interacting with major city centres around the world.
But when we speak of how fast other financial sectors of the world are gaining traction, we see things in a different light. Sure, London may be in the forefront – 3000 years of an economic society will tend to have these results-but the speed at which all other countries are gaining traction in the financial world is astonishing.
So when we see a sub-economy of the UK, namely Scotland, looking to separate their currency ties, they had better have their technology in line to keep up countries who are looking to make their currency the basis of trade for commerce. The strength of one’s currency can now be influenced by the technology which serves it; this is the kind of technological age that we are now dealing with, one that is on a more globalized scale than ever before.
Jim: I’d argue that since 1990 the wealth has reached the hands of the multitude in London. Thatcher and Thatcherism is long gone, there is no aristocracy and no unions, so everything had balanced out.
It has reached an equilibrium, and from that point where equilibrium was reached, London has been on fire. Carnary Warf is booming out there right now. With all that, regardless of two points on a scale, London is the centre of commerce.
Think back to the story of Jardines, and you can see the growth of Hong Kong and Shanghai. Their head traders are maybe in New York or London, but they are reporting back to a superintendent of head traders.
The east is just miles ahead.
I think in that the question of New York versus London, technology is lagging in both by a gazillion compared to the east.
We’re entering this world where the commerce centre of the Universe is going to be the east. Compared to that, if you’re technology is laggard, you will never be in the centre of the game. New York needs to up their technology to even enter the B leagues.
Archana: In my opinion, to be reckoned as a financial hub, you have to be first and foremost a successful and an attractive city. London definitely leads the popularity index! Coupled with that fact is what my colleagues alluded to..the time difference is a huge plus when deciding on the competitive advantage that both cities have to offer. Also, being a successful city means that London, is able to attract some of the brightest minds in the business, which becomes hugely relevant considering the amount of money that gets exchanged every single trading day! Having said that, whether London continue to be attractive in the years to come depends heavily on how much they invest in their technology, which is definitely lagging behind. This is especially relevant, in the trading circuit where there is a constant need to shave off valuable milliseconds.