Financial traders in London earned up to 50% more last year than their counterparts in New York, according to research by headhunter Napier Scott.

It reveals that a typical City trader of sophisticated derivatives products with seven to 10 years’ experience earned an average of £1.6m in pay and bonuses in 2006.

An equivalent trader in New York took home £1.06m — or 51% less. Last year the average pay for traders working in London was only 10%-15% more than their American rivals.

Shaun Springer, chief executive of Napier Scott, says: “This is not something that has happened overnight, but is part of the gradual erosion of the US markets and the explosive growth we have seen in Europe. That has made the talent pool larger and so attracted more firms to open their operations.”

The survey also reveals that New York is lagging behind Asia in terms of pay for traders with experience in dealing sophisticated financial instruments such as derivatives and bond-based products.