Financial centre

New York City's Financial District in Lower Manhattan, including Wall Street, the largest International Financial Centre (IFC) in the world.[1]

A financial centre (BE), financial center (AE), or financial hub, is a location with a concentration of participants in banking, asset management, insurance or financial markets with venues and supporting services for these activities to take place.[2][3] Participants can include financial intermediaries (such as banks and brokers), institutional investors (such as investment managers, pension funds, insurers, and hedge funds), and issuers (such as companies and governments). Trading activity can take place on venues such as exchanges and involve clearing houses, although many transactions take place over-the-counter (OTC), that is directly between participants. Financial centres usually host companies that offer a wide range of financial services, for example relating to mergers and acquisitions, public offerings, or corporate actions; or which participate in other areas of finance, such as private equity, hedge funds, and reinsurance. Ancillary financial services include rating agencies, as well as provision of related professional services, particularly legal advice and accounting services.[4]

The International Monetary Fund's classes of major financial centres are: International Financial Centres (IFCs), such as New York City,[5] London and Tokyo; Regional Financial Centres (RFCs), such as Shanghai, Shenzhen, Frankfurt, and Sydney; and Offshore Financial Centres (OFCs), such as Cayman Islands, Dublin, Hong Kong, and Singapore.[a]

The City of London (the "Square Mile") is one of the oldest financial centres. London is ranked as one of the largest International Financial Centres in the world.

International Financial Centres, and many Regional Financial Centres, are full–service financial centres with direct access to large capital pools from banks, insurance companies, investment funds, and listed capital markets, and are major global cities. Offshore Financial Centres, and also some Regional Financial Centres, tend to specialise in tax-driven services, such as corporate tax planning tools, tax–neutral vehicles,[b] and shadow banking/securitisation, and can include smaller locations (e.g. Luxembourg), or city-states (e.g. Singapore). The IMF notes an overlap between Regional Financial Centres and Offshore Financial Centres (e.g. Hong Kong and Singapore are both Offshore Financial Centres and Regional Financial Centres). Since 2010, academics consider Offshore Financial Centres synonymous with tax havens.[c]

  1. ^ "New York widens lead over London in top finance centres index". Retrieved 25 June 2022.
  2. ^ Kenton, Will. "How Financial Hubs Work". Investopedia. Retrieved 2 October 2020.
  3. ^ "Financial Centres: What, Where and Why?" (PDF). The University of Western Ontario. Retrieved 24 May 2015.
  4. ^ Cite error: The named reference Roberts2008 was invoked but never defined (see the help page).
  5. ^ Huw Jones (27 January 2020). "New York surges ahead of Brexit-shadowed London in finance: survey". Reuters. Retrieved 27 January 2020. New York remains the world’s top financial center, pushing London further into second place as Brexit uncertainty undermines the UK capital and Asian centers catch up, a survey from consultants Duff & Phelps said on Monday.
  6. ^ Cite error: The named reference h1 was invoked but never defined (see the help page).
  7. ^ Cite error: The named reference missing profits was invoked but never defined (see the help page).

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