Women earn up to 60% less than men in the finance sector, an Equality and Human Rights Commission report says.
The research indicates that although numbers of men and women in the sector are equal, the pay gap is more than twice the national average.
The study also points to a 79% gender gap for annual incentive pay for full-time workers.
The TUC says the figures are evidence that the City is failing to shed its "impenetrable" glass ceiling.
Women working in the fund management, stockbroking and future trading areas suffer the largest pay gap, the commission says.
Seventy per cent of men in the financial sector as a whole earned more than £29,400 in 2007/8, while 70% of women earned less than £29,500.
The report is the first stage of the commission's inquiry into pay rates in the finance sector.
It found that 28% of those working in professional occupations in the sector are women, compared with 42% in the economy as a whole
It also found that 11% of senior managers are women, compared to 28% in the economy as a whole.
Missing out
Trevor Phillips, who chairs the commission, thinks the industry is missing out on women's valuable input.
"We are losing or not taking advantage of talented women from a crucial industry - something we can ill afford in these troubled times," he said.
"There is a culture which somehow assumes that women will take the lowest status jobs and that's where they belong."
Employers may be "tempted to take their foot off the gas when it comes to tackling inequality", he continued.
He also insisted that the commission would investigate what measures could be taken to address the obstacles faced by women in finance.
'Macho reputation'
Sarah Williams-Gardener, director of Opportunity Now, a charity which works with employers to create equality for women in the workplace, said it is the responsibility of the employer to ensure equality of pay.
"In 2009 a person's gender should not have such a significant impact on their pay packet," she said.
Responding to the report, the TUC said that it was evidence that female staff were being short-changed.
"The city is failing miserably to shed its macho reputation and impenetrable glass ceiling," said Brendan Barber, General Secretary of the union.
The TUC is calling for the sector to tackle this culture with more pay transparency and more family-friendly career paths.
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