Unit of Study Outline Unit Code FINC3014 Unit Title Trading and Dealing in Security Markets Semester 2, 2013 Pre-requisite Units: (FINC2012 or FINC2002) or (FINC2013 or FINC2003) or (FINC2014 or FINC2004) Co-requisite Units: N/A Prohibited Units: FINC3004 Assumed Knowledge and/or Skills: Students must have a good understanding of corporate finance Unit Coordinator: Reuben Segara Address: Room 447, The Business School Building(H69), The University of Sydney NSW 2006 Email: reuben.segara@sydney.edu.au Phone: 9351 8790 Consultation Hours: Please go to Blackboard for details of all staff consultation times. Class Day(s): Please go to Blackboard for class times and locations Required Text / Resources: Financial Trading and Investing, by John L. Teall, Academic Press, ISBN 0123918804 This Guide to Unit Learning Content and Assessment MUST be read in conjunction with the Business School Student Administration Manual for information about all processes (sydney.edu.au/business/currentstudents/student_information/student_administration_manual) and the Business School unit of study common policy and implementation information that apply to every unit of study offered by the Business School (http://sydney.edu.au/business/currentstudents/policy). In determining applications and appeals relating to these matters it will be assumed that every student has taken the time to familiarise themselves with these key policies and procedures. BUSINESS SCHOOL Version: 2013 Business School 2 1. Unit of study information This unit is concerned with the processes which turn orders into trades in securities markets, and the forces which mould and affect both order flow and order execution. The unit is an introduction to some fundamental market design and structure ideas. At the end of the unit, students should be able to understand (1) how the international markets for foreign exchange, swaps, bonds and equities are organised, (2) how trading is conducted in these markets and how these transactions are cleared, (3) how the markets are regulated, if they are supervised and what risks different counterparties face in these markets. The unit aims to equip students to independently analyse international investment and financing alternatives and to estimate expected returns and costs taking into account liquidity risk, price volatility and credit risk. 2. Program learning outcomes Business Knowledge: Our Bachelors programs develop each graduate to be adept in identifying 1. and understanding major commercial trends both locally and globally leading to students who are able to demonstrate an understanding of the key challenges in managing business in a range of business and cultural contexts. Critical Thinking: Our Bachelors programs develop each graduate to be a critical thinker and 2. discerning decision maker leading to students who are able to solve business problems by identifying and critically evaluating implications of business decisions from a range of disciplinary business perspectives. Business Analysis and Problem-Solving: Our Bachelors programs develop each graduate to be a 3. capable business analyst and problem-solver leading to students who are able to analyse and diagnose business problems and design a range of business improvements that can result in significant business process improvement and/or the exploitation of advanced information and communications technologies. Communication: Our Bachelors programs develop each graduate to be an effective and 4. professional business communicator leading to students who are able to communicate effectively, both orally and in writing, using a range of modes of communication including business reports and presentations and including the ability to negotiate and persuade in a business context. Team Working: Our Bachelors programs develop each graduate to be an effective team member in 5. a variety of business contexts leading to students who are able to collaborate effectively with others in a professional business manner as both members and leaders of teams, and in relation to client interactions. Ethical and Social Responsibility: Our Bachelors programs develop each graduate to be an 6. ethically- and socially-responsible professional leading to students who are able to demonstrate an understanding of pertinent moral, ethical and corporate social responsibility considerations and the potential impacts (positive and negative) that business decisions can have on a range of stakeholder groups. 3. Unit learning objectives At the successful completion of the unit students should be able to: - Identify the processes by which security prices come about, why trading occurs and how trading is BUSINESS SCHOOL Version: 2013 Business School 3 conducted - Discuss how financial decisions by corporations turn into trades that move prices in exchanges - Connect the theory of corporations to the visible financial market news in the media - Put your own trading strategies into practice and evaluate them with the aid of a real-time trading simulator. BUSINESS SCHOOL Version: 2013 Business School 4 4. Assessment Assessment Name Work Type Program Learning Outcomes Assessed Length Weight Due Date Closing Date Oral presentation Group 1, 2, 4 15 minutes 10% Weekly Weekly Mid-semester exam Individual 1, 2, 3 n/a 20% 17-Sep-2013 17-Sep-2013 Rotman Interactive Trader (RIT) assignment Individual 2, 3, 4 6 A4 pages 20% See BB See BB Final exam Individual 1, 2, 3 n/a 50% Final Exam Period Final Exam Period Academic Honesty Week 4 All Assessments are Compulsory. This means you must undertake all assessments. If you do not undertake a particular assessment you will receive zero for that assessment. ** Students must complete the Academic Honesty module in Blackboard with a mark above 80% by the final day of exam, or an Absent Fail (AF) grade will be given for the entire unit. Students can complete the module multiple times until this grade is achieved. Students who completed the module with a score of 80% or above in any previous semesters do not need to do it again. *** The due date for an assessment is the last day on which you can submit the assessment without penalty. If you submit the assessment after that date, you will receive a late penalty, unless excused by special consideration, special arrangement or disability services adjustment. The closing date is the last day on which an assessment will be accepted for marking. A task occurs over a number of weeks, e.g. class presentations, due and closing date are both the first occasion of the task. Conditions of Assessment The Business School has standard conditions governing assessments such as late penalties, word length and so on. Please go to the Business School policy and implementation information at http://sydney.edu.au/business/currentstudents/policy Referencing Style Students should adhere to the Business School Referencing Guide at http://sydney.edu.au/business/reference_guide Assessment details Oral presentation Task Description G All students are required to give a 15 minute presentation to the class on set journal article, which relates to the unit of study material for that week. The purpose of this assessment is to encourage you to read academic papers and be aware of how the material you are learning relates to the real world. Your presentation must not exceed the time limit. Tutors will stop your presentation after 15 minutes! Keeping your presentation short and succinct is an important skill to learn. These BUSINESS SCHOOL Version: 2013 Business School 5 presentations will be given in the first (or last) 15 minutes of class during weeks 3 to 13. It is imperative that all presenters are professional, prepared and on time! Each oral presentation will be completed in a group of at least 2 students. All group members must be in the same tutorial and equally contribute in their oral presentation. You are required to provide copies of the article and summaries of your presentation (1 page limit), which you plan to discuss to all students in your tutorial in the week of your presentation. All students are expected to ask questions to the presenters and/or to constructively critique their presentation. Being able to contribute to group learning and solving problems with others is an attribute employers value highly. Assessment Criteria G Oral presentations will be assessed using the following criteria:
- Relevance of the article to the course material - Level of interest in the topic - Quality of the analysis - Quality of the presentation - Appropriate use of available multimedia - Familiarity with the content of your presentation - Ability to meet the time limit Other Information G Your tutor will allocate a presentation date to you in your first tutorial (Week 2). You must provide your tutor with a completed individual cover sheet on the day of your presentation. This individual cover sheet is provided on Blackboard. The grades for your oral presentation will be placed on Blackboard at the end of week 13. Mid-semester exam Task Description G The mid-semester exam will be held during the lecture in week 8 (16/09/13). All lecture / readings /tutorial material from Weeks 1-6 inclusive are examinable. Assessment Criteria G To perform well in the mid-semester exam, you will need to (i) have a thorough understanding of how markets are organised and the regulations that govern them; (ii) be familiar with the different trading protocols and the pricing mechanisms for securities; and (iii) understand all the issues and main findings of literature discussed in the classroom. Other Information G The format of the exam will be of a multiple choice variety. During the mid-semester exam you must display your student ID card on your desk. The only other material you are allowed on your desk is a pen, pencil, an eraser and a calculator. Mid-semester test details will be posted on Blackboard in the week prior to the test. Rotman Interactive Trader (RIT) assignment Task Description G Details of the Rotman Interactive Trader (RIT) assignment will be made available on Blackboard. RIT BUSINESS SCHOOL Version: 2013 Business School 6 is an application that simulates a stock exchange and allows users to transact financial securities with each other on a real-time basis. The user-friendly and transparent interface has been designed specifically to facilitate the learning experience. Users will be able to see each step of transaction process occur as they submit their orders to the market and trade with one another. Under the control of an instructor, datasets for different trading games can be loaded. Assessment Criteria G All RIT trading games will be associated with a short-assignment question that will require you to analyse your trades and quotes, and explain them in relation to theory and practice. The first RIT session is aimed to familiarise you with the RIT software (nb. more information will be provided on Blackboard). Two trading games will be run for the remaining RIT sessions. The games used will allow students to understand a number of market microstructure concepts discussed in lectures and classes, which will form part of your assessment. Other Information G RIT sessions will form part of 3 to 4 tutorials and will be held in the computer labs. Each student will be randomly assigned to a computer lab on a particular day in replacement of their normal tutorial for that week. Final exam Task Description G The final exam will be held during the University Examination period with the date, time, and location to be advised by the Examinations Centre. The exam will be two (2) hours, thirty (30) minutes closed-book exam, plus an additional ten (10) minutes reading time only. The final exam may comprise of a combination of multiple choice, short answer, problem solving and discussion questions. It will cover all material included in the unit of study. Assessment Criteria G To perform well in the final exam, you will need to: (i) accurately interpret the questions and identify the central issues being asked; and (ii) have a thorough understanding and knowledge of all the material covered from Week 1 to Week 13 inclusive. Other Information G Further information will be provided in the lectures in Week 13 and on Blackboard. No early exams will be given under any circumstances. 5. Other suggested resources for students All lectures and seminars are recorded and will be available within Blackboard for student use. Please note the Business School does not own the system and cannot guarantee that the system will operate or that every class will be recorded. Students should ensure they attend and participate in all classes. Additional recommended texts Trading & Exchanges, Market Microstructure for Practitioners, by Larry Harris, Oxford University Press, ISBN 0-19-514470-8, 2003 BUSINESS SCHOOL Version: 2013 Business School 7 Equity Markets in Action The Fundamentals of Liquidity, Market Structure and Trading, by Robert A. Schwartz, John Wiley & Sons, ISBN 9780471469223, 2004 Trade Execution, Arbitrage and Dealing in Australia, by Alex Frino and Reuben Segara, Pearson Education, ISBN 978 1 4425 0539 1, 2008 Blackboard and other electronic sites This unit will make extensive use of Blackboard. All major announcements will be made using Blackboard. Lecture notes and tutorial solutions will be posted on Blackboard. Please note that Blackboard is not a substitute for lectures or lecture content. 6. Feedback and improvements made in response to feedback The Business School seeks feedback from students and staff in order to continually improve and innovate all units offered. For information on previously collected feedback and innovation made in response to feedback, please see http://sydney.edu.au/business/learning/planning_and_quality/feedback/student BUSINESS SCHOOL Version: 2013 Business School 8 7. Unit schedule Week/ Topic Materials (e.g. readings) Lecture/Seminar/Problem Based Learning Session Tutorial/Lab/Workshop Assessments Due 1 29 Jul 2013 Teall, Chapter 1 Introduction 2 5 Aug 2013 Teall, Chapters 1 & 2 Part I: The Structure of Trading see Blackboard 3 12 Aug 2013 Teall, Chapters 1,2 & 3 Part II: The Structure of Trading see Blackboard 4 19 Aug 2013 Teall, Chapter 10 The Benefits of Trade / Behavioural Finance concepts see Blackboard Rotman Trading Lab 5 26 Aug 2013 Teall, Chapter 5 Liquidity traders see Blackboard 6 2 Sep 2013 Teall, Chapter 12 Informed Traders see Blackboard Rotman Trading Lab 7 9 Sep 2013 see Blackboard Measurements of liquidity and volatility see Blackboard 8 16 Sep 2013 see Blackboard No lecture (mid-term exam in lecture) see Blackboard Mid-term exam held in lecture (17/09/13) 9 23 Sep 2013 Teall, Chapter 9 Transaction costs analysis (TCA) see Blackboard Rotman Trading Lab Common week 30 to 6 Oct 10 7 Oct 2013 Teall, Chapters 6 & 11 Market efficiency / Consolidation vs. Fragmentation see Blackboard 11 14 Oct 2013 Teall, Chapters 6 & 7 Arbitrage and Hedging see Blackboard Rotman Trading Lab 12 21 Oct 2013 see Blackboard Market abnormalities (Bubbles, Crashes, Insider trading) see Blackboard 13 28 Oct 2013 see Blackboard Review see Blackboard