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Many companies raise new capital on the London money market. The quiet- edged market, that is the market of Government shares, allows the
Government to raise money by issuing stock through the Bank of England.

The Exchanges now going through a further period of change which has been described as the most significant period since “The Big Bang”.

Money markets.

London’s money markets channel wholesale short-term funds between lenders and borrows. These operations are conducted by all the major banks and financial institutions. The Bank of England regulates the market. There is no physical market place; negotiations are conducted mostly by telephone or through automated dealing systems. The main financial instruments are CDs
(Certificates of Deposit), bills of exchange, Treasury and local authority bills and short-term Government stocks.

Financial Futures and Traded Options.

Financial futures are legal contracts for the purchase or the sale of financial products, on a specified future date at a price agreed in the present. Trading and financial futures developed out of the numerous futures markets in commodities which originate from London’s position as a port and from Britain’s need to import food and raw material.

Options are contracts which give the right to buy or sell financial instruments or physical commodities for a stated period at a predetermined price.

Financial futures and options are traded on the London International
Futures and Option Exchange (LIFFE) which was established in 1982..

Commodity Exchanges

Britain remains the principal international center for transactions in a large number of commodities, though the consignments themselves never pass through the ports of Britain. The need for close links with sources of finance, shipping and insurance services often determines the locations of these markets in the City of London. There are futures markets in cocoa, coffee, grains, rubber, sugar, pigmeat, potatoes there.

Gas, oil for heating and petroleum are traded through the International
Petroleum Exchange, Europe’s only energy futures exchange.

Copper, lead, zinc, nickel, aluminum, aluminum alloys and tin are treaded through the London Metal Exchange (LME), the world’s largest non-ferrous base metals exchange.

The Baltic Exchange is the world’s leading international shipping exchange.
It contributed to 292 Mln pounds in net overseas earnings to Britain’s balance of payments in 1995. Baltic dealers handle more than a half the world’s bulk cargo, transportation of oil, ore, coal and grain. All
Britain’s agricultural futures markets are operated from the Baltic
Exchange and physical trading and commodities is also carried out there.

Chapter 4.

The International Role of the City of London in the World Monetary and

Currency Fields.

A recent comprehensive study of four world cities - London, Paris, New York and Tokyo - confirmed many strength of London and described it as possibly the most international of all world cities. The study said that London and
New York are the only two pre-eminent international financial centers with advantages over other cities. One city that is emerging as a financial center of the Asian continent is Tokyo.

Strengths of London include:

1. The concentration of business and service functions - among them support services such as legal services, accountancy, and management consultancy.

2. Efficient world-wide communication links.

3. A favorable position in the time zone between the United States and Far
East.

4. A stable political climate.

5. World-class service industries including hotels, restaurants, theaters and other cultural attractions.

Britain and the City of London as a financial symbol, encouraged international liberalization in financial services. It played a major role in negotiating agreements closely connected with GATT (General Agreement of
Tariffs and Trade) as well as negotiations within the Organization for
Economic Cooperation and Development. Briefly, apart from world-wide insuarence and banking strength, Britain’s important features include:

. Its foreign exchange market,. whose daily turnover of 294 Mln pounds in

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