London Market Size

Despite the changes that have taken place in international finance and financial markets in recent decades, the City of London remains one of the largest and most sophisticated markets in the world. London contributes 2.4% of national income, with financial services representing 19.5% of total income. The overall trade balance of financial services was £40 billion in 2009. The financial sector paid £53.4 billion in tax in 2009/2010 which was 11.2% of total government receipts. Financial services employs around 315,000 people in Greater London, including the city of London and Canary Wharf, and over one million people in total across the UK. There were over 12,000 businesses operating out of the City. The financial sector in total represents around 500% of GDP.

London continues to be important with regard to each of the following particular markets:

(1)    International Banking

London remains the principal international banking centre. UK banks held over £5 trillion in assets in 2010, which represented around 18.1% of the global total with US banks only holding around 11.6% It still conducts more international banking business than both Tokyo and New York (with 19%  as against Tokyo 12%, New York 9%, Paris 8% and Frankfurt 7%). London is the principal centre for the Islamic finance, with 22, banks and five being fully Sharia compliant.

(2)    Foreign Banks

London has the largest number of overseas or foreign bank operations than any international financial centre. There wer over 500 banks in the UK (with only 287 in New York, 101 in Tokyo, 231 in Frankfurt and 123 in Paris).

(3)    Eurodollar Markets

London continued to be the largest centre for trading in Eurobonds with 70% of the market and $416 billion been issued in 2010 and the largest in terms of euro lending. 19% of cross-border lending is managed in the UK, which is larger than any other country.

(4)    Stock Exchange

The London Stock Exchange remains the fourth largest formal stock exchange market in the world with $2,407bn equity market capitalisation (after NYSE Euronext $11,794bn, Tokyo Stock Exchange $3,277bn and NASDAQ $3,165 bn). The London Stock Exchange was the largest in terms of foreign equities with around 58% of total foreign dealings in 1997 (as against 24% in New York and 3% in Toyko, Paris and Frankfurt combined).

(5)    International Equity Listings

London had the largest number of foreign companies listed with 551 (previously 526 with New York 356, Frankfurt 229 and Paris 193).

(6)    Fund Management

London and Edinburgh remain the largest financial centres for asset management in Europe with a 29.5% market share and Euros 3,18bn under management. It is separately reported that over £4 trillion of funds are managed in the UK. 20% of total global hedge fund assets are managed in the UK.

(7)    Foreign Exchange

London remains the largest foreign exchange market in the world with over $3.2tn being traded daily in early 2011. While it previously dealt with in excess of $637 billion a day (32% of the global total), this rose to around $1.8 trillion by 2010. London's figure compares with $904bn in New York,$312 billion in Tokyo, $266 billion in Singapore and $262 Switzerland. The total amount of funds moving around the world through financial markets each day is estimated to be in excess of US $4 trillion.

(8)    Financial Derivatives

The London International Financial Futures and Options Exchange (LIFFE now part of NYSE Euronext) is the largest derivatives exchange in Europe and the third largest in the world after the US with 2.8 million and 1.27 tn euros in daily trading. London is also the centre of the international (over the counter) OTC derivatives markets with 45.8% of a $684 trillion market.

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(9)    Insurance

The London insurance markets are the largest in Europe and the third largest in the world with 8% of total worldwide premium income. Lloyd's of London is the largest insurers market and especially strong in the marine and aviation insurance. London is the largest issuer of marine insurance with 20% of the global market.

(10)  Shipping

The Baltic Exchange deals in 50% to 66% of total international shipping freight (fixtures) with regard to dry cargo and 50% of the sale and purchase of ships globally. The Lloyd's Register of Shipping is the main ship classification society in the world while London remains the main international centre for shipping related finance. Half of the main banks that provide shipping finance are based in London.

(11)  Gold Market

London remains the centre of the international gold market with in excess of $30 billion being traded daily.

(10)  Commodities

The London commodities markets are among the largest in the world. The London Metal Exchange (LME), in particular, deals in over 90% of the world's metal turnover. 112 million metal contracts are traded in London every year.  The LME and the London Petroleum Exchange (LPE) are also among the largest markets in the world for derivatives related commodity contracts.