London's the foreign exchange center
Or maybe we should say "centre." Stephen Beard reports that London does more than twice the amount of foreign trading as New York, and that one advantage has a lot to do with location.
London's Great Westminster Clock, a.k.a. "Big Ben" (Adrian Dennis/AFP/Getty Images)
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TEXT OF STORY
Doug Krizner: The global financial system has become incredibly interconnected. Just look at how the subprime mortgage mess here hurt banks in Frankfurt and London.
The currency market is where all of this is played out. This morning, the Wall Street Journal sites a new report showing daily turnover in the foreign exchange reached $3.2 trillion this spring. That's daily. That's more than the annual economic output of Germany or China.
And the center of forex action is no longer New York. It's London, as Stephen Beard reports.
Stephen Beard: Currency trading is the world's largest financial business. More than $3 trillion worth of deals are done every day.
And London has the lion's share of that market -- 34.1 percent of it, according to the latest figures. That's now more than double New York's share.
London's edge, says analyst Neil Mackinnon, comes down to its location:
Neil Mackinnon: You know, London has this advantage of covering the sort of Asian and American time zones. For international investors who want to enjoy the benefits of actively traded markets, London fills the bill.
The British capital has benefited from the huge increase in the foreign exchange reserves of China and other Asian countries.
And, says Mackinnon, London's increasing dominance may also be due to the growth of hedge funds here, which play a bigger role in currency trading than ever before.
In London, this is Stephen Beard for Marketplace.
