The UK financial watchdog has opened an emergency headquarters to keep the financial heart of the capital beating in case of a major terrorist attack on London.

The Financial Services Authority (FSA) has opened the centre in a secret location.

This centre is designed to be operational within an hour of a terrorist attack and has room for up to 300 staff.

We realised it was key that the FSA has to be able to operate if its headquarters had been disrupted

John Fryer, FSA

FSA spokesman John Fryer said the emergency headquarters would allow the FSA to co-ordinate the flow of information in the City, so that firms and markets could still find out what was going on in a chaotic situation.

The nerve centre will also be linked to the back-up offices at 35 of the UK's largest banks and financial services companies.

However, the FSA says it is concerned at the lack of preparedness of smaller banks and fund management companies.

Tower evacuated

Similar disaster management systems were put in place in the United States by banks and other financial institutions after the after 11 September attacks.

In theory, if a disaster befalls a large UK bank, the City or the FSA itself, the nerve centre could co-ordinate trading in the UK for several months.

This FSA initiative is in direct response to the attacks on New York's World Trade Centre, which devastated the city's financial district.

London's Canary Wharf tower, next door to the watchdog's offices, was evacuated on 11 September as a precaution.

"After the attack on the World Trade Centre we realised it was key that the FSA has to be able to operate if its headquarters had been disrupted," says Mr Fryer.

Previously, the FSA emergency back-up facilities had been housed within the Canary Wharf headquarters.

Cash crisis

The FSA nerve centre is also geared towards coping with less dramatic events than a terrorist strike.

For example, the nationwide failure of bank cash machines is one scenario that is being prepared for by the FSA disaster-planning team.