CIS 9555 – Sample Course Syllabus

Title IT in Financial Markets
Description

Exploration of the application of information technology (IT) in the financial services industry. The student will learn how IT affects the financial services industry, survey the various forms of financial information systems, assess the potential for strategic advantage based on information technology, and measure value added by IT in the financial services industry. Topics will be covered through a combination of lectures, case studies, team projects, and software development projects.

 

Even if you have an undergraduate degree in finance, it doesn’t prepare you for the realities of how markets and their underlying infrastructure work today. 60-75% of equity trading in the US is done electronically with algorithms, high frequency quant models and automated market makers.  We have over 50 equity market places, ECNs, Alternative Trading Systems (ATSs), internalized markets as well as a now electronic NASDAQ and Designated Market Maker (DMM) based NYSE.  What is the mysterious dark liquidity and naked access?  What may have caused the flash crash?   Are the markets rigged?  What are the issues?  We also have many new electronic evolving payment systems, from debit cards, to PayPal, to Bitcoin. These all require knowledge of both the business processes and underlying technology.

 

The financial services industry is being transformed by globalization, regulation, competition, consolidation and technology.  These forces will be explored, focusing on how technology is both a driver of change as well as the vehicle for its implementation.  Industry consolidation and convergence will be viewed in light of current events.  The course objective is to bring both the business practitioner and technologist closer together.  Topics will be covered through a combination of lectures, readings, news and case studies

Prerequisites CIS 9000 or CIS 9001; FIN 9770.
Learning Goals
Grades

Midterm– Intro and Financial Markets                           35%

Quiz – Payment Systems and Cryptography                30%

Quiz – FX, Futures and Options                                    30%

Class participation                                                          5%

Textbooks and other material
Topics Introduction to the Financial Services Industry

Money

Banks, Securities Firms, Insurance o The IPO Process

Introduction to Markets and Trading

Market Data and the SIP

Market Indices

Order and Execution Management Systems (OMS/EMS)

US Equity Markets

NYSE history and new DMM structure

NASDAQ history and becoming an Exchange

Electronic ECN Markets

Maker Taker Market models

Bulletin Board and Pinksheets

Institutional Trading

Liquidity and Transaction Cost Accounting (TCA)

Institutional Algorithmic Trading

Alternative Trading Systems (ATSs)

Dark Liquidity and Dark Pools and Smart Order Routing

Low latency Trading and the Flash Crash

Automated Market Making

The May 2010 Flash Crash

Quant Trading (Stat Arb, Pairs, etc.) Trading Strategies

HFT and Are US Equity Markets Rigged?

Payment for Order Flow

Wholesalers (Internalizers)

HFT, Colocation, Latency Arbitrage, Front Running

Market Structure, Fragmentation, Spreads,  Volatility

International Views on HFT

After the Trade,  Clearance and Settlement

CUSIPS, LEI

Central Counterparties, Depositories

Prime Brokers

Payment Systems, retail and institutional, use of cryptography

Check, ATMs, Credit and Debit Cards

Automated Clearing House (ACH)

Intro to Cryptography, SSL, Public key infrastructure

New Models, PayPal,  NFC, EMV, Apple Pay, Bitcoin

Institutional Money Transfer, Fedwire, CHIPS, SWIFT

Introduction to Foreign Exchange Spot and Forwards

Introduction to Futures Contracts

Introduction to Options Contracts

In each topic we will look at the six key forces that drive the industry:

o        Regulation

o        Competition

o        Consolidation

o        Convergence

o        Technology

o        Globalization

 

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