A report from consulting firm McKinsey & Company and commissioned by New York City Mayor Michael Bloomberg and Senator Charles Schumer suggests that for New York to keep its position, the U.S. must reform its regulatory environment and immigration rules. The study asserts that the keys to competitiveness in the world market are: the availability of skilled people and a more balanced and fair legal and regulatory environment and that, in each of those areas, “the U.S. is moving in the wrong direction,’ making it less attractive to foreign investors. Specifically, the corporate governance rule Sarbanes-Oxley (SOX), is too complicated and expensive, it is difficult to attract qualified American and foreign workers, and the legal environment does not discourage frivolous securities litigation.
The study, “Sustaining New York’s and the US’ Global Financial Services Leadership,” suggests that ways to stem the possible tide away from Wall Street are to revise SOX, making it less costly for small firms to implement; reform securities litigation laws to make the environment more predictable; and ease barriers to skilled foreigners working in the U.S.
If the current environment continues, McKinsey predicts that Wall Street could lose between 4% and 7% of market share in the global financial market, a cost of $15 billion to $30 billion in revenue to the financial services industry, over the next five years. According to the report, London is New York’s largest threat for market share.
In compiling the report, McKinsey interviewed more than 50 financial services CEOs and business leaders and also surveyed over 300 other senior executives.
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