A few months ago feathers in the City were badly ruffled by the news that London's competitive advantage over New York had halved. Using a complex formula drawn up by a specialist consultant, the City Corporation takes half-yearly soundings on how London is doing by comparison with other world financial centres.

Although the records do not go back that far, it is pretty certain that London outstripped New York for the first time not long after the American authorities, in their wisdom, decided to fit a ball and chain on Wall Street in the shape of the Sarbanes-Oxley regulation.

Let us at this point spare the blushes of the former Lord Mayor who suggested, as the euro project approached fruition, that the City could lose out to Frankfurt, a prospect that now seems about as probable as England beating South Africa in a Test match. The Americans handed the City a huge advantage. So that February study was taken seriously. Why, draw a straight line on a graph, and in six months' time we'll be level pegging. And six months after that ...

Straight line extrapolation is never to be trusted. And now here come figures from the Foreign Exchange Joint Standing Committee that suggest London is pulling further ahead of New York in forex dealing. The capital remains, absent some unimaginable geological upheaval, lodged usefully between the Asian and American time zones. History shows that once a financial centre gains sufficient critical mass, and the resulting depth of expertise, it is almost impossible for a rival to dislodge it. Indeed, it probably requires a regulatory or legislative screw-up along the lines of, well, Sarbanes-Oxley, I suppose.

It is too tempting, in times like these, to focus on the equities market, and the woes therein. Yes, turnover is paltry, and trading in too many stocks is so illiquid that investors are effectively locked in. Most brokers might as well have taken the summer off.

But there is more to London than equities. Two weeks ago Icap, a British business that has emerged in recent years to become a world leader, reported quarterly revenues up 15 per cent year on year, with a strong performance from forex.

London now has the world's most advanced market in carbon trading. Liffe, the financial futures market, is seeing volumes up by a quarter and is still introducing innovative new products. This column has said it before. Things might not be all that bad.

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