It’s a typical Wednesday evening in the BMO Financial Group Finance Research and Trading Lab. Stationed across the room, Master of Finance students are staring at their computer monitors, skimming class notes and discussing this evening’s assignment.
Professor Tom McCurdy has presented this Forecasting Risks and Opportunities class with their next case. Tonight, these students will need to imagine that they are junior analysts at a fixed income trading desk, tasked with developing a credit risk model. When the trading day opens on the Rotman Interactive Trader, these analysts will need to quickly adjust their trading strategies to adapt to breaking news that might impact their portfolios.
Five minutes later, when the first simulation is finished, the class waits in anticipation for their performance report and for the class results to be projected on the screen at the front of the room. Inevitably, some students will achieve their objective while others miss the mark on the optimal strategy.
Ultimately, these cases are about teaching every student how to make decisions during uncertain times, says McCurdy, who is also the founding and academic director of the lab.
“Essentially, we’re training the next pilots in finance,” adds McCurdy, who considers the lab’s market simulation software similar to flight simulation programs that aspiring pilots use during training.
“Before they fly an aircraft, pilots are equipped to deal with every worst-case scenario because of practice simulations,” he explains. “Many of our students go on to become finance professionals who complete transactions that impact stock markets around the world. They need to know how to identify, manage and mitigate risks.”
A wealth of resources
The lab, which sits on the second floor at the Rotman School of Management, is the perfect training ground for finance professionals.
All Rotman graduate students have 24-hour access to the space, which features 71 dual-monitor computer stations that are equipped with Factset, S&P Capital IQ and real-time data feeds. As well, six of the computer stations are outfitted with Bloomberg software. The media walls, at the front and back of the room, continuously stream prices of major securities, as they change throughout the day.
Typically, students use the lab’s resources to complete research for class assignments, prepare stock pitches for interviews with financial firms or to use one of the Rotman-developed training platforms: the Rotman Interactive Trader or the Rotman Portfolio Manager.
“As Tom always says, in finance, it’s not just about theory. It also depends on what other players in the market are doing and a mix of other factors beyond your control,” says Amanda Wildi (BCom ’17), one of the lab’s assistants. “With a deeper knowledge of finance, you’ll end up making better decisions under pressure.”
Facilities at the BMO Financial Group Finance Research and Trading Lab
Learning by doing
For McCurdy, who teaches in Rotman’s Commerce, MBA, MFin and MFRM programs, it’s important to incorporate hands-on learning in all his classes.
“In Tom’s classes you’re applying what you’ve just learned right away,” recalls former student Tracy Chong (MFin ’17), an associate in commercial FX sales at BMO Capital Markets. “Some of the material can be very statistics-heavy, but the cases and simulations we practiced put the lessons into context.”
The Rotman Interactive Trader, which is used in all of McCurdy’s courses, features 50 different cases that vary in complexity. Each case challenges students to better forecast market behaviours and react strategically when faced with a set of uncertainties.
“There were a lot of cases that allow you to work on a very specific risk,” says Daniel Ghali (MBA ’17), who previously worked in investment banking and took the Risk Modelling and Trading class with McCurdy. “Tom just takes a complicated issue apart one piece at a time, so that you can understand the full picture.”
The numerous trading competitions that the lab hosts, every year, also serve as important learning opportunities for students. Recently, McCurdy and his team organized the 14th annual Rotman Interactive Trading Competition (RITC), where student teams, from over 50 universities across the globe, went head-to-head on six trading cases.
“These competitions are a chance for us to meet others in the field and really test how our skills measure up against peers around the world,” says Agnes Chang (MFRM ’17) who served on the U of T team that competed in the recent RITC. The competition gave Chang a chance to test out a trading algorithm they she and her teammates had developed.
“In our lab, students are learning how to learn,” says McCurdy. “In their careers, they’ll find themselves confronted with new challenges. We’re teaching them how to look ahead and adapt.”