Courses

F335

Security Trading and Market Making

  • 16-weeks
  • 3 credits
  • Prerequisite: F370 or F304 with a grade of C or better

Theory and practice of securities trading at exchanges around the world; how trading and the design of markets affect liquidity, informativeness, transparency, volatility, and fairness. Analyzes alternative trading strategies and the cost of trading. Examines innovations in security exchanges and regulatory policy, and provides hands-on trading experience using realistic trading simulations.

Learning Objectives:   
I. OVERVIEW      
    A. Introduction      
    B. The Trading Industry
II. HOW TRADING IS DONE      
    A. Orders      
    B. Market Structure Around The World      
    C. Limit Order Book vs. Call Markets
III. SECURITY TRADER'S VIEWPOINT      
    A. The U.S. Over Time      
    B. Transaction Cost Measurement      
    C. Paris, Tokyo, and London      
    D. Recent Developments      
    E. Institutional Traders
    F. Trader Simulation Competition      
    G. Trader Simulation Presentations     
    H. Day Traders
III: MARKET MAKER'S VIEWPOINT      
    A. Inventory Management      
    B. Market Manipulation and Insider Trading
    C. Underwriters As Market Makers      
    D. Specialists          
    E. Brokers and Informed Traders      
    F. Arbitrageurs
IV. REGULATOR'S VIEWPOINT      
    A. Transparency in Corporate Bonds      
    B. Dealer Simulation Competition      
    C. Dealer Simulation Presentations
    D. Crashes     
    E. Market Quality Disclosure Rules      
IV. COMPETITIVE EXCHANGE VIEWPOINT      
    A. Competition in Options      
    B. Trading Innovations  

Typical Text: Trading and Exchanges - Larry Harris

Kelley School of Business

Faculty & Research