Trading Places

Bringing the marketplace into the classroom.

INTERVIEW | by Victor Rivero

Leo Murphy business schoolIn 1994, around the time the futures exchanges were moving from floor trading to electronic, computer-based trading, Trading Technologies launched the original version of their flagship product, X_TRADER®, the year they were founded, and they’ve grown up alongside electronic trading. Today their customers include 19 of the top 20 futures brokers plus many global banks, proprietary traders, futures commission merchants (FCMs), money managers, commodity trading advisors (CTAs), hedge funds and commercial hedgers. They have a total of 12 offices around the world with staff in North and South America, Europe and the Asia/Pacific region. In this interview, Leo Murphy, the company’s university relations program manager (pictured), as well as a teacher of economics at Benedictine University and Lewis University, discusses bringing the marketplace into the classroom and what that means for teaching, learning and students.

Victor: What is the University Program and why/when did you create this program?

Leo: We unofficially started the University Program about ten years ago. Back then, we donated our software to universities on an ad hoc basis. We had a very small group of schools using our software when I joined TT in 2006. I was hired to spearhead TT’s education initiative and since then, the program has grown to include more than 50 schools worldwide. Our university partners are listed on our website.

The University Program’s vision is to build working relationships with academia that are mutually beneficial to both TT and the school. We try to help schools by bringing the marketplace to the classroom. The program makes our software accessible to students through donations to universities. It allows educators to use real-world professional trading software to educate their students and prepare them for careers in the markets. Our experience has been that universities benefit from our innovation while we benefit from their feedback and their application of our software.

Students are able to experience real market activity in a simulated environment. Textbook topics like liquidity, volatility, the bid/ask spread and price come to life when students use our software. The tools enable students to get hands-on experience using professional trading technology that demonstrates the marketplace application of textbook theories.

Victor: In what capacity do you work with professors and students?

Leo: The first thing we do is to make our software available to the university by donating it. We help with installation, then follow up with any training and support the school may need.

In many cases, a school will ask us to collaborate with them on a specific project. Some of the ways we have worked with schools are by:

-       Speaking on campus

-       Creating a simulated trading environment in a university trading lab

-       Creating financial engineering applications

-       Serving as a platform to develop computer science applications with our application programming interfaces (APIs)

-       Assisting with trading competitions

-       Assisting with curriculum development

Victor: What is the ideal university setting for this technology?
Leo: Most schools use our software in trading labs or in classes related to financial engineering, business or computer science, but sometimes I’m surprised at how schools apply our software. For example, the University of Warwick in the UK is using our software to study behavioral finance—specifically, trader behavior and associated decision-making biases. It’s an interesting application of our software. We’re flexible and don’t require that the use of our products in schools be limited to just business, math, computer science or engineering.

Victor: What are some specific stories of universities using your technology?

Leo: Many schools have X_TRADER in trading labs for students to use at their convenience. Many also use the software in class to demonstrate market principles. But there are some creative applications.

Locally, three schools that are using our software in really interesting ways are Northwestern University, Illinois Institute of Technology (IIT) and the University of Chicago. At Northwestern, X_TRADER is used in a financial markets class. Students are required to go through X_TRADER training so that they can experience the markets and understand the fundamentals of market microstructure. Faculty at IIT have incorporated one of our APIs in a number of textbook examples that show how to code an automated algorithm. And at University of Chicago, we’re working with the math department and students in their financial math program. Their students have projects where they use our FIX Adapter product with the Financial Information eXchange (FIX) protocol, the messaging language that is universally used by buy-side and sell-side market participants.

Outside Chicago, Tulane University uses X_TRADER in two classes focused on the energy markets. They’ve also hosted international trading competitions where we provided the trading platform and helped plan the competition.

And right now, we’re assisting the University of Colorado Denver in developing a curriculum on futures markets for their Advanced Finance class.

Victor: How has technology changed in your University Program?

Leo: I see more and more interest in automated trading, so the demand is moving toward writing code to perform tasks that in the past were done in a point-and-click fashion. This makes our automated trading tools like Autotrader®, Autospreader® and ADL® (Algo Design Lab) very attractive to schools. Personally, I like to make sure that what we are providing the schools reflects how real business is conducted. The industry has moved beyond pit trading so it’s important for us to stay current and provide cutting-edge tools for automated and algorithmic trading.

To this end, as our products are enhanced, so is the software used by the universities. The software we donate is the same product our customers use with no dilution to the feature set.

Victor: Why is it important for educators to prepare students for the financial industry?

Leo: I think any industry needs to interact with education to assist in preparing students for the marketplace. Specific to finance, it’s important for students to know how business is conducted and be acquainted with the relevant tools. The textbook is indispensable, but seeing it come to life in application is priceless. This is where I think our program helps.

Victor: What does a school need to do to qualify for the program?

Leo: The qualifications are minimal. All we require is that the school sign a contract to officially accept the donation. To get started, simply contact me through our website, or call me at 312.476.1000. I’ll work with you to figure out how we can help.

Victor Rivero is the Editor in Chief of EdTech Digest. Write to: victor@edtechdigest.com

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