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Monday, October 30, 2006

B-School Trading Centers: Wow, but no substance?

I still remember how impressed I was when I first saw the Ross Trading center. With the large plasma screen and the multiple TV's running overhead, it had the Trading Floor sense. Many schools have similiar rooms that cost them major bucks to setup. Many of them turn into cool web browsing desks when the the Trading Center based classes aren't running. (Which is most of the time) I think these rooms are nice, but they aren't always as useful as they seem. Tepper for example, dismantled their Trading Center to make room for other things because they didn't think it was necessary. I was at Darden recently and their dual screen trading center doesn't have the impact that I thought it should have with the curriculum as well. But, I don't fault the school. I just think that technology is surpassing the need to have these dedicated rooms.

So, when I saw this article recently in BusinesWeek, I was happy to see that the pros and cons of the trading centers were presented for all to read about it. Enjoy - dave
Trading Spaces, B-School Edition
For many B-schools, a flashy "trading room" is the centerpiece of finance programs and a high-profile recruiting and fund-raising tool

by Kerry Miller

The stock market is making a comeback—look no further than your local B-school for proof, where campus trading rooms are becoming more popular than ever.

Trading rooms first appeared on college campuses 10 years ago, when MIT's Sloan School of Management opened its facility in early 1996. Another trading room opened at the University of Texas, Austin's McCombs School of Business just a few months later.

Since then, more than 60 business schools, both grad and undergrad, have built trading rooms. And according to the hardware and software vendors who outfit the labs, most of that growth has occurred within the past two years.
Fundraising Gold

In truth, "trading room" is a misnomer. It's really little more than a standard computer lab gussied up with dual-screen monitors, financial software, and flashing stock tickers. The goal isn't to create a campus full of day traders, but rather, to house electronic sources of financial and investment data for simulations or research—no actual trading occurs.

Trading labs are used as classrooms for finance courses in investing or futures markets, a place where students can analyze real-time and historical financial data or use software to build and test investment portfolios. At many B-schools, the labs also serve as home base for the MBA program's student-run investment fund, as well as a facility for faculty research.

Besides their primary purpose—providing hands-on learning experiences for students—schools have seen that the trading rooms are useful marketing, development, and recruitment tools. As the cost of technologies such as LCD screens and personal computers has decreased, the overall cost of building a trading room has also gone down. That means trading rooms are proving to be increasingly cost-effective ways to recruit students and faculty, and to impress corporate visitors and alumni.
Paying Attention

Several schools have also found other lucrative ways to open up their trading labs to the community. Bentley College, for one, uses its trading room to host a summer camp for high school students called Wall Street 101, introducing them not only to the exciting world of finance, but also to Bentley College. As Bentley can attest, a top-notch trading lab can also go a long way toward enhancing the reputation and prominence of a lesser-known business school.

The trading-room boom also reflects the strong job market in the finance world. Finance positions are the most in demand for 2006, according to the latest Graduate Management Admission Council's Corporate Recruiting Survey. Beverly Hadaway, director of the EDS Financial Trading and Technology Center at McCombs, says one of the original aims of the school's trading room was to attract the attention of Wall Street recruiters, an initiative which she says has been "highly successful."



Blogger aregon23 said...


How are things with you? Its been a while. Interestingly, I just posted something on the Johnson School's Parker Center which coincidently was the model for the Michigan trading floor.

Having said that, I think you are mistaken in calling trading rooms at schools a waste of time. I think they play a key role in setting the tone for people interested in research. The software alone would make any stock enthusiast's mouth water. What we hear from alumni who come back is the hedge fund they work at don't have the software they had back in school, this speaks a lot for the facilities.

Regarding Tepper dismantling their trading floor, I think that speaks a lot about the quality of their portfolio management program and the number of people they send to wall street every year.

Just my $0.02.

6:42 PM  
Blogger Dave for MBA said...

Thanks for the post Aregon. Regarding the Financial Center. I don't know that I said that they were useless. Rather, one can't use them all the time for the amount of money that they cost. The article makes this point pretty clear.

As for schools with Financial Trading Centers or not, your probably right. But don't know enough of the numbers across schools to verify. I'm hoping you might have some numbers to qualify what your saying about the quality of Tepper's education to send people to Wall Street compared to Cornell(Johnson). I do think Cornell is more financially oriented form the get go though. There is no doubting that at all.

I hope all is well with you. What a ride you've been having!

10:04 PM  
Blogger aregon23 said...


You will be surprised at how cheap these centers are to run. Companies that sell financial software usually provide the service free of charge to students. So the question of cost is moot.

This is a win win situation for both companies and students, since, the companies get their software in front of tomorrow's portfolio managers today and if they get them hooked, are assured of business in the future, much like Apple and Dell trying to get into the school system. The students on the other hand get to work on the latest and greatest financial packages available, and come up to speed on what Wall Street is using currently, whereby gaining an edge on the competition.

Tepper, I must say is a great school, just that its graduates are considered to be more engineer in, engineer out. They usually (not always) go out on Wall Street as quants versus fundamental analysts. Which was the point I was trying to make with my comment on their portfolio management program.

Are you checking emails these days or are you too busy? I will shoot you an email, if I am reasonably confident you will see it and reply. :)

7:04 PM  

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