Bad News, London and New York: Finance Hubs Are Becoming Obsolete
Stand on the steps of The Royal Exchange in the heart of the City of London and you can picture the churn of people 200 years ago or more in what was becoming the world’s preeminent financial hub. Stock jobbers, traders and financiers would stream between its great limestone columns with the Bank of England to one side and all surrounded by offices of bankers or trading houses and alleyways to the ever-busy coffee shops.
The exchange was where transactions happened, but the coffee shops played an equally important role in the lifeblood of markets as information centers. People hung out there for refreshment and gossip but also all the details of supply and demand. “[T]he coffee men vied with each other in maintaining the supply of a wide variety of domestic and foreign newspapers, news-sheets, journals and bulletins, customs entry forms, auction notices, price-current lists, etc,” according to David Kynaston’s “City of London: The History.”
Today, London’s future as a global financial hub is under threat. In the popular discourse, that’s largely due to Britain’s exit from the European Union and the ongoing fights over trade and regulations. But Brexit is barely half the story, and New York faces similar threats. While, JPMorgan Chase & Co. is expanding its Paris office with new trading floors, Goldman Sachs Group Inc. is doing the same in Miami and has been hunting for space in Dallas.
What links these moves is the ways technology and regulations have dramatically changed the flow of information in just the past couple of decades. The Covid pandemic showed just how little physical location now matters for many jobs and businesses in finance and gave executives confidence that more operations could be managed remotely.
Old hands barely recognize today’s world.