Examination of securities trading, contrasting idealized markets with real-world complexities, such as costly frictions. Topics include liquidity, price discovery, and trading strategies of various market participants, including hedge funds, individual investors, activists, and insiders. Case studies and current events provide practical insights into investment outcomes.
Additional Requirements for Graduate Students: The graduate counterpart of this course will require additional assignment(s) to stimulate a deeper level of understanding and connection to course and Finance major material.
Athena Title
Securities Trading
Undergraduate Prerequisite
(FINA 3000 or FINA 3000E or FINA 3000H) and (BUSN 3000 or BUSN 3000E or BUSN 3000H)
Graduate Prerequisite
FINA 7010 or permission of department
Semester Course Offered
Offered fall
Grading System
A - F (Traditional)
Student learning Outcomes
Students will understand the purpose and structure of financial markets, emphasizing how investors - either directly or through intermediaries - interact with them.
Students will understand best practices for trading, common pitfalls in strategy selection and execution, and the broader composition of the modern trading ecosystem.
Students will understand the viability of alternative market systems and the complexities of financial regulation.
Students will understand market mechanisms, the trading process, and the influence of various participants on the economy and society.
Topical Outline
I. Why Do We Need Markets?
• Discussion: Liquidity and price discovery
• Discussion: Latency arbitrage and its societal cost
II. Understanding the Trading Process
• Case Study: The FLV Capital Trading Desk
• Discussion: Pitfalls of institutional and individual trading
III. The Modern U.S. Trading Landscape
• Case Study: New York Stock Exchange vs. NASDAQ
• Discussion: Exchange competition, the roles of speed and technology, liquidity fees
IV. Alternative Market Structures
• Case Study: Investment Technology Group
• Discussion: Is dark trading harmful?
• Discussion: Market regulation
V. Activist Investors
• Case Study: Deutsche Börse - Derailed by Hedge Funds
• Discussion: The link between financial markets and corporate finance
VI. Short Selling
• Case Study: Citron Capital
• Discussion: The effect of various market participants on price efficiency
VII. Retail Investors
• Case Study: Robinhood Markets
• Discussion: Do markets serve retail investors well?
VIII. Insider Trading
• Case Study: Texas Gulf Sulphur
• Case Study: Martha Stewart
• Discussion: Should insider trading be legal?
