4. Based on NUTs 3 level data
5. NYSE Europe operates from various locations including Amsterdam, Paris and London.
The dominance of New York and London over the other
financial centres looks set to continue in the short and
medium term – as there are few other places that combine
the rule of law, a pool of talent, ready supply of real estate
and strong regulatory environments. But there are new
centres which have used the hiatus that the financial crisis
provided to strengthen their offer.
3.4.1. Key global financial centres
There are a number of cities which could lay claim to being
dominant financial services centres. Distinguishing them
is not simple. From a pure analytical viewpoint there are a
range of hard measures that can be used to distinguish the
different tiers of activity. Beyond these are a range of softer
factors which, although important, are harder to measures or
compare on a like-for-like basis.
Based on employment in the financial services sector
4
,
New York stands out as the largest centre. London and
Tokyo are the next largest of the established markets
followed by Hong Kong and Singapore
(Figure 1)
.
Unsurprisingly output from the sector is also strong in many
of these centres. Cities such as Amsterdam and Frankfurt
show low levels of employment despite their standing as
known financial centres. Shanghai stands out as a major
centre for employment, though output is low.
At the heart of many of these centres is the volume of trade
on the local stock market and associated support services.
By market capitalisation New York dominates with both
the NYSE and NASDAQ
(Figure 2)
. Tokyo, London, NYSE
(Europe)
5
, Hong Kong and Shanghai sit not far behind. The
prominence of listed companies and overseas banks, a
measure of cross border activity also highlights those markets
where banks and other financial services companies prefer
to reside. On this basis London, New York and Singapore
(Figure 3)
stand out at the top. Sydney, Hong Kong and
Frankfurt all sit in the next tier.
The domination of the financial services sector and
supporting industries also provides additional benefits. All
these cities benefit from strong connectivity both in terms
of telecommunications and direct flights to key global cities
in established and emerging markets, and have established
internal transport networks.
These networks serve to attract talent. In the UK the banking
and finance sector attracts 21% of graduates in employment,
with London having a higher concentration of graduates
compared to the UK regions, according to the Office for
National Statistics and DTZ Research. Similar trends are
observed across other key financial centres, for instance New
York’s financial services employment make up 10% of total
employment compared to 6.6% for the national average. The
supply of skilled labour from both domestic and international
pools is a key factor in sustaining growth in this sector.
Most of these key financial centres are embedded within
national systems committed to fostering the rule of law, a
strong regulatory organisation and an environment free
from corruption. There are a range of indices measuring
factors such as corruption, political stability, and the ability to
undertake business. The major developed countries including
Australia, Germany, Hong Kong, Singapore the UK and US all
score highly on these measures and are all highly ranked and
sit in the upper quartile. There is a clear contrast with some
emerging countries such as Brazil, China and South Africa,
which sits further down the ranks
(Table 1)
.
3.4. Geography
26
The future of the financial workplace
|
September 2014
