THE UNIVERSITY OF NEW SOUTH WALES SCHOOL OF BANKING AND FINANCE FINS5566 ELECTRONIC FINANCIAL TRADING SESSION 2 2004
CONTENTS Page Staff involved in the course and their contact details 3 Course convenor 3 Information about the course 3 Course outline (Objectives of the course) 3 Who is this course for? 3 Prerequisites 3 Expected learning outcomes 4 Teaching strategies 4 Textbook 4 Other reading materials 4 Assessment in the course 5 Course schedule 5 Administrative arrangements and resources for students 6 Course announcements 6 Special consideration 6 Calculators 7 English 7 Academic misconduct 7 Learning support 7 2
STAFF INVOLVED IN THE COURSE AND THEIR CONTACT DETAILS COURSE CONVENOR: Dr Jerry T Parwada Senior Lecturer School of Banking and Finance Quadrangle Building Room 3049 Phone: 9385 7936 Email: j.parwada@unsw.edu.au Consultation hours during the session will be displayed outside the lecturer s office. When contacting the lecturer using telecommunications technology, please do not request a response by mobile telephone. It may be most efficient to email the lecturer with your brief query if you are unable to ask the lecturer in person. However, queries that are complex or long-winded should be brought to the attention of the academic staff in the staff member s consultation time. INFORMATION ABOUT THE COURSE COURSE OUTLINE (AIMS OF THE COURSE) In this course we study how and why investors trade and the impact of various market structures on the interaction and outcomes of security transactions. We examine existing market structures, types of traders and the strategies they use to achieve their objectives. By concentrating on how market participants trade, the course lays the foundation necessary to understand the practical implications of the introduction of new technologies to securities trading and the economic opportunities they present to market participants. We also analyse securities trading venues as operating firms; in particular we concentrate on implications for competition between markets and trading systems. WHO IS THIS COURSE FOR? Potential practitioners in investment management and securities trading or broking. Interdisciplinary students who expect to apply their specialised skills to the securities trading industry; e.g. information technology students will gain an in-depth knowledge of the functioning of the trading system in which to overlay specialised applications. Students wishing to broaden their knowledge of finance in general. PREREQUISITES The course has no specific prerequisites although students are expected to bring a general knowledge of the financial system gained from previous 3
experience in finance or courses such as FINS5512 Financial Institutions and Markets since financial securities are the primary unit of study for this course. EXPECTED LEARNING OUTCOMES On completion of this course you should be able to: Outline the main types of market structures, traders and orders (instructions) for the trading of financial securities; Describe the interlocking roles of different types of securities market participants; Interpret and apply theoretical predictions and empirical findings to real world securities markets; Relate the trading motives of traders to observable market outcomes, including market efficiency, why some traders win and others lose etc; Evaluate the economic performance of trading strategies implemented by different investor types; Differentiate between traditional and emerging securities trading technologies; Relate securities trading practices to ethical standards and identify typically unethical trading strategies and their potential economic impact on market participants; Examine the regulation of the securities trading industry; and Analyse securities trading venues as business entities under conditions of competition, consolidation and globalization. TEACHING STRATEGIES Emphasis is placed on case studies, examples, practitioner presentations and illustrations inspired by the shift from traditional to electronically facilitated trading. Learning is facilitated in a lecture/tutorial environment. TEXTBOOK The prescribed textbook for this course is Larry Harris. 2003. "Trading & Exchanges: Market Microstructure for Practitioners." Oxford University Press: Oxford NY. ISBN: 0-19-514470-8. The textbook is available at the University Bookshop. Other reading materials will be provided as the course progresses. OTHER READING Students are also encouraged to keep up-to-date with the latest developments in financial markets, and this can be achieved through regular reading of the financial press. Extending your reading in this manner should increase your appreciation for the subject and also aide your learning. The publications The Australian Financial Review and Business Review Weekly are also recommended. 4
ASSESSMENT IN THE COURSE The course assessment is as follows: Project: 30% Mid-Session Examination: 30% Final Examination: 40% Additional information: Project: The project will be in the form of a standard business proposal (20-30 pages in length, double spaced). Full details of the assignment will be circulated in Week 3; submission is due in week 12. Mid-Session Exam: To be held at the normal venue and during normal lecture time. Final Exam: To be held during the final examinations period and administered by Examinations branch. COURSE SCHEDULE The course consists of one (1) three-hour combined lecture/tutorial per week: Time: Wednesday, 6pm-9pm Venue: Smith Theatre Week Date Topics Readings 1 28 Jul Introduction - The securities trading industry Chpt 1, 2 2 4 Aug Order types and market structures Chpt 3, 4, 5 3 11 Aug Order driven v call markets Chpt 6 4 18 Aug Brokers and trading strategies Chpt 7, 8, 24, 25 5 25 Aug Informed traders and market efficiency Chpt 10, 11, 18 6 1 Sep Liquidity suppliers: dealers and traders Chpt 13, 15, 17 7 8 Sep Mid-Session Examination 8 15 Sep Liquidity and volatility Chpt 19, 20 9 22 Sep Evaluating trader performance Chpt 21, 22 29 Sep Mid-Session Break 10 6 Oct Alternative trading systems Chpt 26 Competition between markets 11 11 Oct Floor v automated trading systems Chpt 27, 28 Bubbles, crushes and circuit breakers 12 20 Oct Guest Lecture by Industry Executive - Details TBA 13 27 Oct Insider trading, regulation and ethics Chpt 12, 13, 29 14 3 Nov Roundup and examination tips 5
ADMINISTRATIVE ARRANGEMENTS AND RESOURCES FOR STUDENTS COURSE ANNOUNCEMENTS This course uses the WebCT environment for all on-line components. The FINS5566 WebCT course site may include such resources as the course outline, lecture notes, timetables, class profiles, staff contact details and announcement areas. Students should regularly check the latest announcements and obtain course details from the FINS5566 Web-CT site. The WebCT site for this course can be accessed from the WebCT log-in page at: http://webct.edtec.unsw.edu.au SPECIAL CONSIDERATION Students are reminded that supplementary assessment is not automatic and is dependent upon the severity of the circumstances, student attendance and academic record during the session. Students should refer to The University of New South Wales Calendar Procedures as well as policies concerning special consideration on the web. The website information is available as follows: http://www.student.unsw.edu.au/atoz/atoz-special.shtml http://banking.web.unsw.edu.au/ Students must be familiar with the information outlined on both websites. As a first step, students must make a formal application submitted to NewSouth Q. You must have supporting (original) documentation (e.g. doctor s certificate). You must lodge your application within 3 working days of the event to which you are requesting special consideration. Students should be aware that minor ailments are not eligible grounds for special consideration. Any unsubstantiated request for special consideration will be considered to be minor. Special consideration requests should also not be viewed as an insurance policy by students. It is advised that students always make their best effort to meet the assessment requirements, including attendance of the examinations as best they are able. Students are expected to complete their work in a timely manner so that an illness in the last few days will not jeopardise the submission of their assignment. Such illness will not constitute grounds for special consideration. An application for special consideration does not guarantee an offer of supplementary examination and/or a pass in the subject. The Assessment Review Committee will decide on whether a supplementary examination is to be granted. 6
If a student is granted a supplementary examination but does not attend the supplementary examination, he/she will not be granted further assessment except in exceptional circumstances. Students are advised that if they are intend to travel overseas at the end of this session, they should consider taking out travel insurance which allows supplementary examinations as valid circumstances for cancelling travel. Please note that all supplementary exams in this subject, whether for midsession or final will involve both written and oral examination - the latter part being before a lecturer panel. CALCULATORS Non-programmable calculators that are consistent with the University s standard policies may be used in both the mid-semester and final examinations. ENGLISH Students who have difficulty with English should seek assistance through the Student Counselling Unit or the Languages Unit, which offer courses especially for people in such a position. In particular the unit "English for Academic Purposes" is recommended. If you need such assistance it is a good idea to seek it early in the session. ACADEMIC MISCONDUCT Academic misconduct is a serious offence whose consequences may include the disruption of a student s progress. The university has detailed procedures for dealing with complaints of student misconduct. The full text of these procedures can be obtained from NewSouth Q (Student Enquiries) or at the following website: www.student.unsw.edu.au/academiclife/assessment/ LEARNING SUPPORT Education Development Unit Additional learning support, tailored to the needs of FCE students, is available from the Education Development Unit (EDU) in the Faculty. The EDU offers a range of services for FCE students including: o Academic skills workshops run throughout the session; o Printed and on-line study skills resources e.g. referencing guide, report writing and exam preparation; o A drop-in resource centre containing books and audio visual material that can be borrowed; o A limited consultation service for students with individual or small group learning needs. 7
More information about the EDU services including on-line resources, workshop details and consultation request forms are available from the EDU website. Contacts and location: EDU Web: http://education.fce.unsw.edu.au EDU Location: Room 2039, Level 2 Quadrangle Building EDU services are free and confidential and are available to students of the Faculty of Commerce and Economics. Other UNSW support In addition to the EDU services, the UNSW Learning Centre provides academic skills support services for students. The Learning Centre is located on Level 2 of the Library and can be contacted by Phone: 9385 3890 or through their website: http://www.lc.unsw.edu.au/. Students experiencing problems of an academic or personal nature are encouraged to contact the Counselling Service at UNSW. This service is free and confidential and run by professional counsellors. The Counselling Service is located on Level 2, Quadrangle East Wing, and can be contact on 9385 5418. 8