Some say so, I'm not so sure:
New York can still claim higher total value of trading, due to its enormous domestic market. But London already has eclipsed the Big Apple as the big noise in global finance. In the past six months, more money has been raised on the LSE for international firms than either of its larger New York competitors.
Stock exchanges are definitely a winner-take-all, where "All" is a particular kind of business; Nasdaq dominates among smaller stocks, the NYSE has a huge lead in large companies seeking cachet, and the rest of the market is divided among local exchanges whose primary advantage is that they mostly speak the same language. Unless the LSE can offer a Nasdaq-sized quality difference, they're going to be stuck with Nasdaq-sized influence. What do they offer?
They have the local language, which is the lingua franca of global finance, but also an unsurpassed pool of multilingual speakers; a less cumbersome regulatory regime than the expense and distraction wrought by America's Sarbanes-Oxley reforms of 2002, rushed through the U.S. Congress in the wake of the Enron Corp. and Worldcom Inc. debacles; a time-zone advantage by which London straddles North America and Asian markets; and a dynamic LSE chief executive, Clara Furse, a relentless investor in cutting-edge technology that has made the LSE probably the world's most efficient market. (LSE trades can now be executed in less than 10 milliseconds). Furse also is the "get big or go home type." Having beaten back a takeover attempt by Nasdaq in March, Furse now is trying to elbow her way into the NYSE's proposed merger with Euronext, which operates bourses in Paris, Brussels, Amsterdam and Lisbon, proposing a threesome. Furse is also among the exchanges wooing the Tokyo Stock Exchange into a Western alliance.
The City has one regulator, the Financial Services Authority (FSA), that does the work of 10 federal, state and industry bodies in New York. Schumer and Bloomberg cite experts who calculate that U.S. regulatory costs for companies registered in New York are 15 times greater than the amount levied on U.K.-based firms. There has also been a stunning increase in U.S. class-action lawsuits by aggrieved shareholders, from $150 million (U.S.) in 1997 to $9.6 billion last year. Britain and other countries have laws that discourage litigation deemed to be frivolous.
Yikes. But American exchanges have the same linguistic advantages (New York is a pretty polyglot city, and the Nasdaq is everywhere), venture capitalists and the next House Majority Leader are pushing for Sarboxe reforms, and the time-zone issue could be solved by fiat if the NYSE or Nasdaq ever see it as a real threat. London's biggest advantage here is their regulatory laxity -- not the first time, but it's still a surprise. If Sarboxe gets relaxed and the indices stay strong, exchanges should be able to push legislation adding to their competitive edge. When the stakes are being upstaged by the British market for the first time in a century, Congress might just decide that further deregulation is worth the risk.