EAIR FORUM COPENHAGEN 2008 Damian Barry Department of Accounting and Finance Monash University Melbourne Australia

EAIR FORUM COPENHAGEN 2008 Developing the Monash Financial Trading Room - a learning laboratory for finance students

THE TRADING ROOM – a short history 1990: Created with support from large bank: 16 screens. Taught money market operations and management : Hardware and software upgrades. Single subject only 2003: “Monash Trader” application developed. Joint project with Faculty of IT. Capacity increased top 30 screens 2006: Upgrade of hardware and new software applications. Teaching expanded to include financial planning; equities and securities trading; SAP. 2007: Further technology upgrade and new commercial software applications

THE TRADING ROOM - our vision for this learning laboratory A STATE OF THE ART TEACHING AND LEARNING SPACE USING INFORMATION TECHNOLOGY AND SOFTWARE APPLICATIONS TO DELIVER LEADING EDGE FINANCE AND ACCOUNTING EDUCATION and RESEARCH

THE TRADING ROOM – what it does..simulates equity and currency dealing using real data..brings theory and practice together..is state of the art technology..develops students team work, communication and love of learning

SOFTWARE TOOLS  FINANCIALTRADING SYSTEM (FTS)  MONASH TRADER (currency and equities trading)  VISIPLAN (financial planning)  SAP  IniPax (equities, carbon, water trading)  HEDGE RX (2008)  RISK MANAGER (currency trading)

“MONASH TRADER” – how it works Three students act as a bank Role of each bank member. –Dealer –Risk Manager –Position Keeper Market view Strategy for dealing session Reasons for this strategy

Each group (Bank) receives a copy of the economic scenario one week prior to the trading session Each bank is required to submit a trading report outlining their key views in advance of the week’s trading session establishing their strategy. Trading commences under the control of the facilitator who fills the role of the central bank, the corporate and the broker. Trading commences between the banks (inter-bank), the corporate and the broker. This trading takes place via a telecommunications system and pricing system developed specifically for the simulation. Information is conveyed to all parties electronically in real time via message boards. Book-squaring time where banks are required to close out their positions and profits are computed. Students then complete their trading report and submit it for assessment as part of a “reflective” learning process prior to the next simulation. The facilitator provides a break in the middle of the trading session to allow banks to reflect on their position and reassess strategy. Repeat Once The Simulation Process – Monash Trader.

THE TRADING ROOM – undergraduate and post graduate teaching Equities and InvestmentOptions, Future and other Derivative Securities Debt Markets and Fixed Income Securities Accounting Information Systems Financial Planning

THE TRADING ROOM – how students learn - pedagogy or andragogy Build on theoretical finance concepts taught in lecture and seminars Application through technology Application of technology to all accounting, banking and finance units wherever possible

Student learning and development and the experience..what they say Linking units together.used marketing..pricing strategies and psychological pricing strategies...management knowledge....regarding responsibilities of each position,..workflow of the team,..dealing guidelines... Economics to.. analyse macroeconomic events... finance and accounting”.

Student learning and development and the experience..what they say The ability to think strategically and apply knowledge rather than simply rely on memorisation. Learning – structuring own learning experiences.. active participant in the learning process.

Student learning and development and the experience..what they say Ethics I had learnt about ethics in business in many other subjects but none of them had ever put me in the position to make real ethical decisions..Those were decisions in actions and under pressure- such as whether to take advantage of other banks’ mistakes. ….the most repeated motto “My word is my bond” and warning “Greed is not good” still echo in my head sometimes. I consider this experience a priceless realistic training of ethics.

Student learning and development and the experience..what they say Report Writing... scary for students but turns out to be very useful for our learning process. Written feedback on a timely basis helped us be aware instantly of what we know and what we don’t know, and more importantly what area to develop. We had the opportunities to try out our new tactics and skills, examine small failures and receive advice on how to correct them. This requirement and feedback make a perfect stimulus pushing us along our learning progress.”

Student learning and development and the experience..what they say Global citizen “The good thing was that we were mixed with students from many different countries in the world and we socialized a lot with them. That prepares us for performing professionally and socially in an international and multicultural context. We became more capable of solving problems in a variety of locations with cultural and environmental sensitivity”

THE TRADING ROOM - development through partnership TRADING ROOM DEVELOPED THROUGH A PARTNERSHIP OF ACADEMICS AND ADMINISTRATIVE STAFF – MUTUAL DEPENDENCY LEVERAGE COMPETENCIES ENGAGEMENT and OWNERSHIP A WIN-WIN FOR STUDENTS/DEPARTMENT/UNIVERSITY

THE TRADING ROOM – an exciting future  Cross discipline teaching and research  Engage with industry - collaborations and partnership  Differentiate teaching - industry guest lecturers  A second trading room  Behavioural research and training

18 THANK YOU … QUESTIONS? Dealing room website: