University of Washington opens room with a view of Nasdaq: Business lab offers real-world lessons

Nasdaq — the virtual stock exchange — opened for business yesterday at the University of Washington Business School, if only for students learning how to buy and sell.

By Marisa Dorazio
Seattle Times business reporter

The trading room is intended to help UW graduate students understand the market and deal with real-life financial scenarios, said Robert Greifeld, president and chief executive of Nasdaq.

"It is a really amazing thing to experience the trading world before I even enter it," said Harry Kim, a second-year MBA student.

The virtual trading room is equipped with 12 workstations, with double-monitor computers, an electronic stock ticker with live data-feed, a data board and TV monitors. Designed to mirror actual trading rooms, it will function as a classroom and laboratory facility.

The Nasdaq Stock Market Educational Foundation donated half the $500,000 cost; donations to the business school accounted for the other half.

One reason Nasdaq chose UW is because the Northwest has the second-highest concentration of companies listed on the Nasdaq. Greifeld said students will use the experience if they go to work for a Nasdaq company.

"Students tend to stay in the same area and have a very entrepreneurial focus," Greifeld said.

Students will have access to real-time information and will simulate trading but won’t complete actual trades.

According to Yash Gupta, dean of the business school, 500 students in courses involving investments, futures and options, and risk management will use the trading room a year. He said the training will better prepare students for when they are applying for jobs. Also, more students will be attracted to the UW business school as a result.

"Schools that have implemented this model have found more students want to come there," Gupta said.

Vance Roley, an investment-course professor, said student teams of two or three will be given a pretend $10 million and the task of managing an investment portfolio. The students’ goal is to maximize their return while minimizing their investment risks.

"I hope to apply financial-investment theory in class using real-time data," said David Hsu, a graduate business student who hopes to work in investment management.

Christy He, another student, wants to know the market and thinks it will be helpful for other investment courses.

"I hope that I can have a real sense of the market," He said. "It is scary at times, but it’s also exciting."

Another course using the room is practical investment management and uses money from the UW business endowment to trade with through a broker.

"Trading real money creates an awareness," said Paul Malatesta, a UW professor who teaches the yearlong course.

Students started with $500,000, he said, now they have $430,000.

Malatesta noted that the decrease is minimal relative to market activity.

The trading room will be open under supervision to graduate business students who have participated in a two-hour training seminar, Gupta said.

Similar trading rooms exist in more than a dozen universities and colleges, including Cornell University, Carnegie-Mellon University, University of Texas and University of Northern Colorado (UNC).

At the Monfort College of Business at UNC, undergraduate finance students have used a similar trading room for four years.

"It’s been an unbelievable learning experience for students," said John Clinebell, a UNC finance professor. "I believe it is beneficial to them to bring a real-world environment in the curriculum."

Clinebell said many of his graduates were offered investment and financial positions.

Marisa Dorazio: 206-464-2291 or at [email protected]

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