Trading Rooms Don’t Have to be White Elephants

In 1994, Carnegie Mellon University opened the first educational trading room.  It had live feeds and developed a curriculum called the FAST Program that integrated the resources of the trading room into the curriculum.  We estimate there are approximately 200 educational trading rooms today.  Some are enormously successful, and early examples are in this article from BizEd magazine: http://www.aacsb.edu/publications/archives/jan03/p22-27.pdf

But it is unfortunately true that most trading rooms, despite their flashy tickers and high costs, end up being be fancy computer labs with minimal impact on student education or benefiting limited numbers of students.    I have seen really fancy trading rooms that are empty most of the time.  Some are used solely to run a student investment fund which is enormously beneficial but involves an extremely small group of students.  Others are used for special “trading courses,” with only one or two sections using the resources in a semester.   In many cases, much more is spent on the look of the room than on resources to help anyone use it.

In our experience, there are three important factors that determine the success of a trading room.  The first and foremost is teaching support.  This requires instructional materials that can be used by professors and that integrate what they normally teach with trading room resources.  The second is technology support provided by a lab manager and/or a set of well trained teaching assistants. Without these two most professors are at a loss on how to use the room.  The third factor is faculty involvement.  If I already teach a successful course and use “real world” cases, why do I need to change? 

There are other factors as well.  These include the traditional academic “turf wars” as well as a lack of incentives to develop an integrated curriculum.   Further, as online courses, distance learning courses, and evening and weekend classes expand, access to a centralized facility becomes problematic. 

Finally, if you are thinking about investing in a trading room, don’t let some vendor sell you a bill of goods.  Talk to professors who have had success in teaching this way, make sure your faculty understands what is involved, and make sure you have a plan for large numbers of students to benefit.  If you have an underutilized room, talk to those who have overcome some of the roadblocks.  We have lots of examples of successful trading rooms, and can put you in touch with them.