by Xinhua writers Liu Yanan, Zhang Mocheng, Wei Ying
NEW YORK, Sept. 13 (Xinhua) -- New York City, as a long-time international financial center, is seeing its financial industry recovering strongly from the COVID-19 pandemic and becoming more and more decentralized, according to industry experts.
GO VIRTUAL, REMOTE
New York's financial industry has been recovering from the pandemic very strongly though the city had been hit very seriously, with banks sending employees back to work from home, stock exchanges stopping people coming to the exchanges and the trading floor of the New York Stock Exchange (NYSE) basically halted, Kevin Chen, chief economist with Horizon Financial, said recently.
New York was hit very hard by the pandemic and that was bad for the city of New York, said Richard Sylla, chairman of the Museum of American Finance.
Still, a lot of financial activity is carried online of computerized trading and "it seems to me that the financial system was not really impacted very much at all," Sylla told Xinhua in a recent interview.
The temporary closure of the trading floor with the NYSE seemed to have very little effect because all the trading went online digitally, Sylla added.
Most of the trading is being done remotely with the NYSE and Nasdaq still open for business, said Chen. He added, "There have been a lot of initial public offerings (IPOs). And a lot of Chinese companies filing IPOs at Nasdaq and NYSE and they have been doing very well."
"I think what happened was that some of the leaders of the New York financial community found out that a lot of their traders and bankers could work pretty well from home," Sylla said.
After adopting a work-from-home mode in the last half year, J.P. Morgan has required its traders to return to offices by Sept. 21, with an eye to retaining employees' camaraderie and training for junior and incoming analysts, according to media reports.
That's a sign of the financial industry that it's safe to be back to New York City, said Chen, who has also been teaching at New York University since 2012.
There are also a lot of transformations and a lot of things have been done virtually instead of working form the traditional office, Chen said in a recent interview with Xinhua.
As for the long-term development, Chen said it's mixed, with some of the work and meetings still being done in the city at the physical office. "But, I think it's true that a lot of work will be done remotely going forward. So there will be a transformation and I think the need of the office space by the banks, financial institutions are going to be less than before."
The banks, insurance companies and asset management companies are going to rent less office space so they will actually have a cost saving, said Chen.
Less demand for office space is actually a plus for financial institutions in terms of cost management but is a negative for landlords and commercial properties, Chen added.
Sylla said it's an experiment so far because it's not clear that people working individually quietly at home can get as much done as if they were together in their teams at the office.
It's hard for members of trading teams to talk to each other if everybody is at home. "If they're on the same trading floor, they can swap the ideas with each other very quickly, less easily from home," said Sylla.
Though the work-from-home mode has worked fairly well, "we don't know that whether it's just as efficient as the old way of people getting together. I think we still have to discover whether the work gets done as efficiently as it did before," said Sylla.
DECENTRALIZATION GOING FORWARD
It has been decades since financial institutions started to move out of Wall Street and New York City, according to both Sylla and Chen.
"The concentration that used to be around Wall Street has actually moved uptown ... It's nothing new for the location of financial businesses to shift around. The pandemic is probably gonna speed that up a little bit" because the pandemic has made people realize that they don't really have to go and be together in offices in Manhattan all day long, said Sylla, who is also professor emeritus of economics with Leonard N. Stern School of Business of New York University specializing in the history of financial institutions and markets.
A lot of hedge funds were already out in the suburbs in Greenwich and Stamford of Connecticut and a lot of the back office things were over in New Jersey, noted Sylla.
New York City will be transformed in a sense that this is still the financial center and still the location of the stock exchanges. But, many of those things will be done remotely virtually from other locations, said Chen.
"I think it would be more like decentralized instead of weakened, because a lot of functions would be distributed to other cities," said Chen, citing the rising role of Charlotte of North Carolina, San Francisco of California, and Nashville of Tennessee.
"It will be more balanced, more distributed instead of concentrated in New York City. So that's the future. You can call it decentralized going forward," Chen said.
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