There are few trading firms in California because (i) most trading in the US is done in New York and surrounding areas during New York hours, and (ii) New York

There are few trading firms in California because (i) most trading in the US is done in New York and surrounding areas during New York hours, and (ii) New York is very far from California. If a trading firm is going to use human traders they would not do it in Cali, because they will have to force their traders to work at uncomfortable hours. If a trading firm is going to use solely computers, they would not do it in California because the time a network signal takes to reach California from New York actually matters in computer based trading.