London loses top derivatives centre status to New York

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As London’s financial industry braces for Brexit, a new report shows the capital has already lost its leadership in at least one key market. New York has now eclipsed the city as the biggest centre for off-exchange derivatives trading.

Bloomberg News reports that new analysis from the Bank for International Settlements shows that the country’s share of the $2.7 trillion a day interest-rate derivatives market fell to 39% this year from 50% in 2013. New York’s share of global trading has climbed to 41% from 23%.

New York usurped London because trading in U.S. dollar derivatives surged at the same time that trading in euro contracts collapsed. Traders are doing less business in London because they expect the European Central Bank to leave interest rates at record lows for the foreseeable future, while anticipating that the Federal Reserve will increase rates next year, compelling them to trade dollar-denominated derivatives, BIS said.

“Nothing is going to happen with interest rates in the euro zone, so no one should have to trade these derivatives,” said Andrea Vedolin, assistant professor of finance at the London School of Economics. “It’s natural that euro trades would go down quite a bit.”

To access the complete Bloomberg News article hit the link below:

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