The Indian financial press has widely reported the Mastercard Centres of Commerce 2007 study that listed Mumbai among the top 10 cities in the world in terms of financial flows ahead of Hong Kong and Shanghai. Many of these reports did not mention that despite faring so well on this sub index, Mumbai ranks 45th out of 50 in the overall index of global centres while Hong Kong ranks 5th.
Mumbai ranks high only in the financial flows sub index while ranking near the bottom (below 40) on all other components. Even within the financial flows sub index, Mumbai owes its place primarily to the vibrant equities market. (Measuring derivative activity in terms of number of contracts also helps since the single stock futures contracts popular in India have small contract sizes.) Even then, the gap separating Mumbai (38.71) from Shanghai (38.30) and Hong Kong (38.06) is quite low compared to the gap that separates Mumbai from Seoul (53.00) or Tokyo (53.39).
The Mastercard study serves to remind us that the equity markets are the real success story in Indian financial sector reform. We do need to replicate this success in other sectors.