Case Studies

University of Michigan

Finance 640 Financial Trading; Finance 618 Risk Management and Derivatives

The Need

The University of Michigan (UM) is home to the Ross School of Business. Since its establishment in 1924, it has become one of the most-well respected business schools not only in the Big Ten conference, but in the U.S. In the U.S. News & World Report’s 2017 rankings, Ross was cited as the country’s third-best business program and fourth-best finance program.

FINC 640 and FINC 618 are aimed primarily at MBA students who expect to take trading jobs following graduation. Professor Tyler Shumway, who instructs both courses, utilized simulation software to supplement his lectures and demonstrate the concepts he was teaching in the classroom, but the platform used synthetic markets. This meant that students were trading fictitious products with fictitious liquidity, volatility and prices, an experience that lacked an accurate depiction of what they’d face after graduation when they transitioned into the workplace.

When he learned that the TT CampusConnect program provided universities with free access to TT’s professional trading software and live CME Group prices, a lightbulb went off. He knew TT could provide him with a superior tool to enhance his lessons and help students better understand how the markets operate.

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The Engagement with TT

When UM first joined the TT CampusConnect program in 2006, Professor Shumway incorporated TT’s X_TRADER® platform into his courses.

In 2016, UM transitioned to the newer TT® platform, which is delivered via the software-as-a-service (SaaS) model. This architecture enables students to access TT through a browser or an app from virtually any device, including not only trading lab workstations in the Tozzi Center where Professor Shumway’s classes are held, but also from their personal laptops and phones.

When the class term begins, every student is given access to the TT platform and a simulated trading account. They are encouraged to use TT throughout the course to put the trading techniques and information covered in lectures into practice. Working with the platform helps them understand how different trading strategies can affect results in the real world.

As the term comes to a close, Professor Shumway heavily utilizes the TT software. During the last two weeks, the TT platform is projected onto a screen in the classroom to illustrate market liquidity, volatility, order types, and order-entry and order-management techniques to the students. On the last day of the course, Professor Shumway dedicates the class to a final “trade for a grade” assignment. The Tozzi Center is transformed into a trading room complete with monitors broadcasting live financial news, and students are assigned between four and six contracts to trade.

This final exercise requires students to demonstrate the knowledge gained throughout the term by independently forming and deploying trading strategies, monitoring working orders and, if needed, modifying strategies to achieve optimal results. Professor Shumway determines each student’s grade by looking at P/L to gauge how well the students mastered the concepts that were covered in the course.

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The Result

Now with the TT platform, not only are students seeing real markets in Professor Shumway’s lectures, they’re also using the same software that’s used by professional traders around the world to develop strategies, manage orders and experience real-world outcomes.

Explained Professor Shumway, “Students can get a much better feel for the life of a trader using the TT system than they can with any of the other trading simulation products we use in class.”

Since UM joined the TT CampusConnect program, more than 2,000 students have enhanced their classroom experiences through hands-on use of TT software. Professor Shumway’s classes are providing students with invaluable skills, making them more attractive to hiring firms. With a strong record of placing graduates in top-tier jobs, there’s no doubt that the collaboration with TT will continue to help UM retain its presence on the list of the country’s top-ranked business programs.