Financial centre
A financial centre is a global city that is home to a large number of internationally significant banks, businesses and stock exchanges.
An international financial centre is a non-specific term usually used to describe an important participant in international financial market trading. An international financial centre (sometimes abbreviated to IFC) will usually have at least one major stock market.
Global Financial Centres Index
The Global Financial Centres Index is compiled by the London-based British think-tank Z/Yen and is published annually by the City of London Corporation.[1] As of 2011, the top ten financial centres according to the Global Financial Centres Index in the world are:[2]
International Financial Centers Development Index
In 2011, the American Chicago Mercantile Exchange and Dow Jones & Company partnering with China's Xinhua News Agency released the Xinhua-Dow Jones International Financial Centers Development Index. According to this index, the top ten financial centres in the world are:[3]
World's most economically powerful cities
In 2008, Forbes ranked the top ten most economically influential and powerful cities in the world:[4]
- London
- Hong Kong
- New York City
- Tokyo
- Chicago
- Seoul
- Paris
- Los Angeles
- Shanghai
- Toronto
Worldwide Centres of Commerce Index
As of 2008, the top ten commercial centres according to the Worldwide Centres of Commerce Index in the world, by country are:[5]
- London
- New York City
- Tokyo
- Singapore
- Chicago
- Hong Kong
- Paris
- Frankfurt
- Seoul
- Amsterdam
The Worldwide Centres of Commerce Index is published by MasterCard Worldwide and is updated annually.
List of major financial centres by location
Africa
Americas
Asia
- China - Beijing
- China - Shanghai
- China - Shenzhen
- Hong Kong, which has one of the largest stock exchanges in Asia (namely, the Hong Kong Stock Exchange) by market capitalisation, the world's second-highest value of initial public offerings,[6] and is the world's freest economy.[7]
- India - Mumbai, which is also called the financial capital/commercial capital of India.[8] It has more than 6 stock exchanges; Bombay Stock Exchange is the world's largest stock exchange in terms of listing[9], Asia's 4th largest and South Asia's largest stock exchange in terms of business. Mumbai also has the 8th largest stock exchange in the world by market capitalization and it is the largest in India by daily turnover and number of trades, for both equities and derivative trading. It is also the richest city in South, West or Central Asia.[10]
- Indonesia - Jakarta
- Israel - Tel Aviv
- Pakistan - Karachi, the financial and economic capital of Pakistan. The Karachi Stock Exchange is the largest in the country.
- Japan - Osaka
- Japan - Tokyo
- Malaysia - Kuala Lumpur
- Bangladesh - Dhaka
- Philippines - Metro Manila
- Singapore, which has significance in foreign exchange and derivatives trading, and the REITs market.
- South Korea - Seoul is one of the main financial centres in East Asia, along with Tokyo, Japan. Home to many foreign financial institutions, banks, and other world corporations, Seoul is fast becoming a choice for foreign investors.
- South Korea - Busan, home of the headquarters of Korea Exchange.
- Sri Lanka - Colombo
- Taiwan - Taipei
- Thailand - Bangkok
- United Arab Emirates - Dubai
- Vietnam - Ho Chi Minh City
Europe
Oceania
Comparisons
- Wall Street. During much of the 20th century, the United States and its financial capital of 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.[12] New York still has strengths in having a "concentration of finance professionals" -- prime brokers, large banks, traders, lawyers, accountants, and private bankers.[13] One analyst suggested the prime factors for success as a financial city were three:
- a pool of money to lend or invest
- a decent legal framework
- high-quality human resources[14]
- London. Some reports have suggested that the City of London has overtaken New York as a world financial capital.[15] London's merger volume was higher than New York's by $79 billion in 2005 and equity issuance was $130 billion versus $105 billion in the United States.[16] Companies seeking to list their stocks have started going to London before New York.[17] There is a perception that "regulatory scrutiny is more burdensome in the United States than in London"[13][17], which has a "transparent and reliable legal system."[18] One report suggested that London's location between Asia and the U.S. meant that it was particularly suitable when taking into account time zones.[18] American organisations have often sent employees to work in London, and one 2008 estimate suggested that there were approximately 224,000 American workers in Britain.[19]
- Shanghai. Official efforts have been directed to making Pudong a financial leader by 2010.[20] 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.[21] 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.[22] China is generating tremendous new capital, which makes it easier to stage initial public offerings of state-owned companies in places like Shanghai.[13]
- 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.[17][23] 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.[13] Hedge funds are doing well in Hong Kong with increased growth from 2006 to 2010.[23] 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.[24]
- 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."[25] Efforts include more English-speaking restaurants and services and earthquake-resistant offices, but that have neglected more powerful stimuli such as lower taxes and a deep-seated aversion to finance.[25]
- Singapore. This city was mentioned as a competitor given its proximity to Asian markets.[18]
- Others. Cities such as São Paulo and Johannesburg and other "would-be hubs" lack liquidity and the "skills base," according to one source.[14] 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.[14] *
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[13] |
” |
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."[13] The firm has computers in New Jersey, two salespersons in New York City, but the remaining 33 employees work in a centre in Missouri.[13]
Offshore financial centres
An offshore financial centre, although not precisely defined, is usually a small, low-tax jurisdiction specialising in providing the corporate and commercial services to non-residents in the form of offshore companies and the investment of offshore funds.
The term offshore financial centre is a relatively modern neologism, first coined in the 1980s.[26] Although the terms are not synonymous, many leading offshore finance centres are regarded as "tax havens", and the lack of precise definitions often leads to confusion between the concepts. In Tolley's International Initiatives Affecting Financial Havens[27] the author in the Glossary of Terms defines an "offshore financial centre" in forthright terms as "a politically correct term for what used to be called a tax haven." However, he then qualifies this by adding "The use of this term makes the important point that a jurisdiction may provide specific facilities for offshore financial centres without being in any general sense a tax haven."
In 2009 the International Financial Centres Forum (IFC Forum) was established by a group of professional service firms and businesses with offices in the leading offshore centres.[28] According to its website, the IFC Forum aims to provide authoritative and balanced information about the role of the small international financial centres in the global economy.
References
- ^ "AFP: Hong Kong joins NY, London uk as top finance centre". Agence France-Presse. http://www.google.com/hostednews/afp/article/ALeqM5iR8Ob1A_eMrXjR_wKFcuyStwvu5g.
- ^ "The Global Financial Centres Index 10". Z/Yen. http://zyen.com/PDF/GFCI%2010.pdf. Retrieved 2011-09-26.
- ^ "Xinhua-Dow Jones International Financial Centers Development Index". Xinhua and Dow Jones. http://index.xinhua08.com/dqszs/bgxz/201107/P020110708322385591732.pdf. Retrieved 2011-07-08.
- ^ ""World's Most Economically Powerful Cities".". Forbes.com. 2008-07-15. http://www.forbes.com/2008/07/15/economic-growth-gdp-biz-cx_jz_0715powercities.html. Retrieved 2011-02-26.
- ^ "Worldwide Centres of Commerce Index 2008". Mastercard. http://www.mastercard.com/us/company/en/insights/pdfs/2008/MCWW_WCoC-Report_2008.pdf.
- ^ "Hong Kong surpasses New York in IPOs". International Herald Tribune. 2006-12-25. http://www.iht.com/articles/2006/12/25/business/borse.php. Retrieved 2008-02-01.
- ^ Ed Feulner (2008-01-22). "Football and economic freedom". IndyStar. http://www.indystar.com/apps/pbcs.dll/article?AID=/20080122/OPINION/801220318/-1/LOCAL17. Retrieved 2008-02-04.
- ^ "Mumbai a global financial centre? Of course!". Rediff.com. http://www.rediff.com/money/2007/apr/27mumbai.htm. Retrieved 2011-02-26.
- ^ "BSE - Key statistics". Bseindia.com. http://www.bseindia.com/about/st_key/list_cap_raised.asp. Retrieved 2011-02-26.
- ^ "National Stock Exchange". Nasscom.in. 2006-07-12. http://www.nasscom.in/Nasscom/templates/NormalPage.aspx?id=28461. Retrieved 2010-08-26.
- ^ The Global Financial Centres
- ^ Nisha Gopalan (November 29, 2010). "Stock Brokers Flock to Asia in Search of Growth". Wall Street Journal. http://blogs.wsj.com/deals/2010/11/29/stock-brokers-flock-to-asia-in-search-of-growth/. Retrieved 2011-01-15.
- ^ a b c d e f g Daniel Gross (October 14, 2007). "The Capital of Capital No More?". The New York Times: Magazine. http://www.nytimes.com/2007/10/14/magazine/14wallstreet-t.html. Retrieved 2011-01-15.
- ^ a b c Daniel Altman (September 30, 2008). "Other financial centers could rise amid crisis". The New York Times: Business. http://www.nytimes.com/2008/09/30/business/worldbusiness/30iht-glob01.1.16579561.html. Retrieved 2011-01-15.
- ^ Patrick McGeehan (February 22, 2009). "After Reversal of Fortunes, City Takes a New Look at Wall Street". The New York Times. http://www.nytimes.com/2009/02/23/nyregion/23wall.html. Retrieved 2011-01-15.
- ^ Heidi N. Moore (March 10, 2008). "DLJ: Wall Street’s Incubator". The Wall Street Journal. http://blogs.wsj.com/deals/2008/03/10/the-little-bank-that-was-wall-streets-incubator/. Retrieved 2010-01-14.
- ^ a b c d Heather Timmons (October 27, 2006). "New York Isn’t the World’s Undisputed Financial Capital". The New York Times. http://www.nytimes.com/2006/10/27/business/worldbusiness/27london.html. Retrieved 2011-01-15.
- ^ a b c Beth Gardiner (January 20, 2010). "The London Banking Center Is Beginning to Feel Like Itself Again". The New York Times: Global Business. http://www.nytimes.com/2010/01/21/business/global/21rglofinuk.html. Retrieved 2011-01-15.
- ^ Julia Werdigier (April 2, 2008). "Paychecks and Passports". The New York Times: Business. http://www.nytimes.com/2008/04/02/business/02EXPAT.html. Retrieved 2011-01-15.
- ^ Seth Faison (December 13, 1996). "Hong Kong Continues to Eclipse An Economic Rebirth in Shanghai". The New York Times: Business Day. http://query.nytimes.com/gst/fullpage.html?res=9B02E6DC143EF930A25751C1A960958260. Retrieved 2011-01-15.
- ^ Hong Liang (2009-05-04). "Software for a financial center here". China Daily. http://www.chinadaily.com.cn/opinion/2009-05/04/content_7740527.htm. Retrieved 2011-01-15.
- ^ Dealbook (March 2, 2010). "Shanghai Opens Doors to Financial World". The New York Times. http://dealbook.nytimes.com/2010/03/02/shanghai-opens-doors-to-financial-world/. Retrieved 2011-01-15.
- ^ a b Cathy Holcombe (ANUARY 14, 2011). "Hong Kong and the Goldilocks Regulator". Wall Street Journal. http://online.wsj.com/article/SB10001424052748703583404576079372306133508.html. Retrieved 2011-01-15.
- ^ (Xinhua) (2009-06-02). "HK, Shenzhen promote financial industry in NY". China Daily. http://www.chinadaily.com.cn/china/2009-06/02/content_7964085.htm. Retrieved 2011-01-15.
- ^ a b Martin Fackler (November 16, 2007). "Tokyo Seeking a Top Niche in Global Finance". The New York Times: World Business. http://www.nytimes.com/2007/11/16/business/worldbusiness/16capital.html. Retrieved 2011-01-15.
- ^ Offshore Financial Centres, Richard Roberts, ISBN 1-85898-155-7
- ^ ISBN 0-406-94264-1, Tim Bennett (2001)
- ^ "International Financial Centres Forum Launched", Cayman Financial Review, 5 January 2010, http://www.compasscayman.com/cfr/2010/01/05/International-Financial-Centres-Forum-launched, retrieved 16 March 2011
External links