University Trading Challenge 2015
Two Birkbeck teams competed in the University Trading Challenge 2015, read a report from one of the participating students.
Birkbeck, University of London students impressed the judges with their financial and business acumen in this year’s University Trading Challenge, at Kingston Business School.
Following the success of last year’s University Trading Challenge, Birkbeck submitted two teams to participate in this year’s competition. The two teams; one from the Department of Economics, Mathematics and Statistics (EMS) and the other from the Economics & Finance Society (EFS), both competed against other universities across the country. This year we are pleased to announce that Birkbeck gained two awards in the University Trading Challenge - a huge success for the College and the students.
An overall performance of third place is highly commendable and a fantastic result, especially as this was only the second time that Birkbeck has entered into this event. Students participated in intensive and interactive competitions, gained first-hand experience in the world of trading and were able to demonstrate their financial skills and acumen to industry professionals. Additionally, the main aim of this competition was to ensure that teams were profitable and display their ability to manage risk.
Before the start of the competition, both teams competed in an individual and team Trading Challenge, where teams would create a portfolio of securities and have the opportunity to place trades based on a Real News Trading Simulator. This is a long term trading challenge that requires focus and patience. There was a real competitive spirit among team members and excitement when members would reach the top ten individual boards. William Tait, a third year BSc Financial Economics student and the captain for the Birkbeck EFS team, won fourth place on the individual trading standing - highly commendable, as he made nearly $400,000 in profit. Additionally, William’s financial instinct guided the EFS team, in terms of profit, to third place for the section. His last minute decision on shorting the S&P500 Index towards the end of the game made massive profits for the team and help secured third place with margin of over $90,000 against the next team.
On the day of the competition, the first challenge was the Treasury Challenge. This section required the teams to manage currency risk by hedging corporate risk and, in addition, to generate profit from currency trading. This was a short term trading challenge that requires the understanding of financial markets and the ability to make quick decisions to generate profit. The Treasury Challenge was an exciting part of the day’s event and saw Kevin Lau, a third year BSc Economic and Social Policy student on the EFS Team, make an astonishing $3.4 million USD in profit, focusing primarily on fluctuations in the Japanese Yen against the Pound Sterling.
The final element of the competition was the Investment Banking Challenge, where the Birkbeck EMS Team delivered a fantastic presentation, earning them the top spot in this section. Both teams were given a case study, which was presented to a group of industry professionals, and had to present a ‘Client and Risk Analysis’ presentation to the judges. The case study involved a gold mining company that currently operated in two different countries and had the potential to mine in Australia. Both the EMS and EFS Team had considered the risk and impact of an expected rate rise from the US Federal Reserve and also how to hedge against currency and gold price fluctuations and they’d also looked into corporate debt. Additionally, they considered macroeconomic elements and non-financial elements, such as political stability and explained their likely impacts and significance.
The presentations were then followed by a short Q&A by the judges who questioned the students on their decisions as to why they chose to hedge certain markets and at what level. The judges were impressed by both teams, but especially by the EMS Team, where they were highly praised for their professional delivery and understanding of financial markets.
The overall performance saw both teams doing well and the Birkbeck EMS Team coming third in the overall University Trading Challenge. Sophie Grimmer, a second year BSc Financial Economics student and captain for the Birkbeck EMS Team, found the whole competition to be “a great, challenging experience, where we were able to apply our theoretical knowledge, gained from studying at Birkbeck, and were able to apply it into practice and learn from it. We also met a lot of interesting people and, most importantly, had lots of fun.”
The management of risk proved to be significantly important throughout the entire competition, as it plays a key role in the financial sector. Risk can come from both internal and external sources, where external sources tend to be out of the control for many firms. Risk management is very important and involves the understanding and be able to analyse the market, and to counter any potential risk that a firm may encounter when trying to achieve their desired objectives, in this case the potential to mine gold in Australia.
The University Trading Challenge was a fantastic opportunity for Birkbeck students to learn how to apply their knowledge of corporate finance and to display their financial and business acumen to industry professionals. Any student, who wishes to have a future in financial services, should definitely consider taking part in this challenge.
Finally, we would like to thank Arina Nikandrova for her support in the capacity of academic advisor and the Department of Economics, Mathematics and Statistics who provided the opportunity to take part in the competition. Additionally, we would like to thank Charles Shaw for his on-going fantastic work and dedication to the Economics & Finance Society.
Birkbeck Economics, Mathematics and Statistics Team
Sophie Grimmer, Captain (BSc Financial Economics – 2nd Year)
Levan Getia (BSc Financial Economics – 1st Year)
Inam Hussaini (BSc Financial Economics – 2nd Year)
Jordan Scott, (BSc Financial Economics – 1st Year)
Birkbeck Economics & Finance Society Team
William Tait, Captain (BSc Financial Economics – 3rd Year)
Nicholas Brown (BSc Economic and Social Policy – 2nd Year)
Michael Gibney (GCert Statistics)
Kevin Lau (BSc Economic and Social Policy – 3rd Year), author.