The latest Global Financial Centres Index has been released with the headline-grabbing ranking that puts New York in the top spot for the first time ahead of London.

But even the rather obscure London-based research group Z/Yen Group says the separation between New York and London is “statistically insignificant” in the GFCI and that other centers are closing the gap substantially among the top cities.

What is also significant, however, is that Chicago, once one of the world’s top 10 financial centers according to the group has been in a steady decline. In the past two years of the bi-annual survey, Chicago’s ranking has been plummeting.

In March 2012 and again in September 2012, Chicago ranked 8th. In March 2013, it fell to 11th and in September 2013, it dropped to 14th. In the latest survey, Chicago now stands at 15th and has been surpassed by other US cities such as: Boston, 8th; San Francisco, 10th; as well as Washington DC, 13th; and as close to an American city outside the US as you can get – Toronto, now 14th. It’s also a shade above Montreal, Vancouver and Shenzhen.

Here is the top 15.

GFCI 15- March 2014
New York
Hong Kong
San Francisco
Washington DC

Here is the full GFCI report:

The latest survey, which received responses from 3,246 financial services professionals, considered key elements such as the business environment, financial sector development, infrastructure, human capital and reputational and general factors. In terms of competitiveness, the survey addressed several key questions such as the business environment, taxation, human capital, infrastructure, reputation and market access, or proximity to clients and suppliers.

For those in Chicago, one has to worry about several of those elements, especially when it comes to the business environment and taxation. A March report from the Chicago-based Civic Federation said Illinois must address its current $5.4 billion backlog of unpaid bills and implement more pension reforms. And more to the point here, Chicago appears to be in deep fiscal trouble as well. The group highlighted Moody’s rating downgrade of Chicago from A3 to Baa1 this month, thus giving the city the second lowest credit rating for a major US city, just ahead of Detroit, which is now in bankruptcy. The Civic Federation’s March 6th report stated that the city’s massive pension problems and high debt levels will continue to grow and that “a long-term financial plan that accommodates expenditure reductions and revenue enhancements to balance its budget” is required.

Those are the civic realities of Chicago today, which make many in the business community nervous. Its financial industry cornerstones – CME Group and Chicago Board Options Exchange – still appear strong and solid, not to mention the world’s  largest equity derivatives clearing house OCC. There are also operations for many other financial players here as well such as Intercontinental Exchange, Boston Options Exchange which is part of TMX in Toronto and upstarts such as the Intellectual Property Exchange International. Chicago is also home to top technology vendors such as Trading Technologies and powerhouse prop firms – Citadel, DRW, and Spot Trading, among others.

Chicago exchanges have long touted the city as the place where the world comes to hedge their risk via derivatives. But as New York and London battle it out for the feel-good top spot, financial leaders should take note that the financial world’s attention and resources are being captured elsewhere in the US, not to mention in other financial hubs that are climbing the rankings here.

It’s time to take a good hard look at Chicago’s positioning among world markets and how it can best put the spotlight back on it.

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