Smaller hubs in emerging markets might have their appeal as heavier regulation threatens the world’s leading international financial centres (IFCs), but New York and London remain the world’s most significant jurisdictions.

New York tops, by a small margin, a ranking of IFCs produced by fDi's sister publication The Banker – as it did last year. In the financial markets, New York has overtaken London for the top position, driven by good capital markets data and banks’ profitability as of the end of 2010, which was one and a half times that of the total pre-tax profit figure of banks based in London.

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London remains, however, the leading hub in terms of foreign exchange turnover, with an overall score twice that of New York. Interestingly, the scores for both London and New York in the overall  ranking are slightly lower than their 2010 value, while other centres in the top five positions of the global ranking have all equalled or improved their scores.

Frankfurt has put in a particularly impressive showing, leaping to fourth place from 12th position last year, thanks in part to the 79 new foreign listings on its exchange – the most received by any centre. Foreign listings now account for almost 10% of Frankfurt’s total listings.

Latin drop

The jurisdiction with the highest number of foreign companies (excluding investment funds) on its stock exchange remains Luxembourg, followed by Mexico City. The Mexican capital is still the highest ranking financial centre from Latin America, but has fallen to 34th place, down 13 places, the most significant drop in the overall ranking. The Mexican IFC occupies sixth place in the new foreign listings table, down from top position last year.

São Paulo has also lost some ground in the overall ranking and now sits in 48th position, down one position from last year. Brazil and its main financial centre have been attracting increasing attention from foreign investors, with international private equity funds setting up shop in the country. The size and depth of the local financial markets are expanding, creating a strong base for future growth. This could be reflected in next year’s ranking.

Singapore retains its lead in the Asia-Pacific region and again is third in the overall ranking, while Hong Kong has climbed one place to reach fifth. Hong Kong also replaces Dubai as the second most popular destination for FDI in the financial sector, after London, which tops the inward FDI table (based on fDiMarkets figures) for the third year running.

Dubai still on the up

Dubai continues to lead the Middle East rankings and has climbed the overall ranking to reach eighth position, up from 11th last year. However, it is facing increasing competition from growing regional hubs such as Doha and Manama, both of which rose by three places from last year’s ranking.

Our ranking of specialised financial centres sees the Cayman Islands on top again, although with a much lower score than in 2010. This could be a reflection of a more in-depth questionnaire used for the 2011 ranking, which also contributed to a lower overall score and position for Bermuda. Guernsey, on the other hand, has jumped two positions and gained second place in the table, followed by Cyprus.

Methodology

The Banker’s ranking of international financial centres is based on data from a range of sources, including financial markets indicators, economic potential and business environment factors. The ranking focuses on the level of international business and the value offered to international institutions seeking to expand their international operations.

In recognition of the fact that data for specialised financial centres is seldom consistent with that for mainland financial centres, The Banker has surveyed each specialised IFC and compiled a separate table using data relevant to these locations. Publicly available data sources were used, as well as The Banker Database and fDiIntelligence.