MARKET DRIVERS

 

Today's high-tech, instantaneous, global financial transactions require the expertise of professionals who can analyze and forecast increasingly complex outcomes. These "financial engineers," are rapidly becoming one of Wall Street's most valued assets.

 

To help meet the need for this expertise, Kent State has introduced a new Master of Science in Financial Engineering degree - one of only 40 such programs worldwide and the only one in Ohio.

 

Graduates of the program, which welcomed its first students last fall, will be quickly in demand. Focused on real-world applications, the program places special emphasis on the derivatives markets and culminates with an industry-based project. "Many of the firms with which we have been working are interested in our students and are looking forward to hiring them," says Dr. Mark E. Holder (pictured below), assistant professor of finance and director of the M.S.F.E. program.

 

The program's cornerstone is Kent State's high level trading floor, comparable to those found at the leading financial institutions. The Financial Engineering Trading Floor will bring the daily tumult of trading to campus by simulating real trading environments with planned access to the major exchanges' training systems.

 

"Students will replicate dynamic trading strategies and derivative security analysis using the same data feeds and trading software employed by the major investment banking firms," explains Dr. George E. Stevens, dean of the College of Business Administration and Graduate School of Management.

 

The trading floor, scheduled to open in April, places the university among a handful of institutions in America with similar facilities. However, Kent State will have the only derivatives-oriented trading floor in the country, reflecting the program's interdisciplinary curriculum and unique emphasis on the application of mathematical models to risk management problems in finance.

 

Kent State's M.S.F.E. curriculum draws on faculty expertise from the finance, mathematics and economics departments. Financial engineers must possess knowledge beyond securities and investments, financial

markets and institutions and international finance. They also need an intimate knowledge of applied mathematics, computer science, statistics, stochastic calculus, probability theory and economic theory.

           

"I can't imagine what it would have been like to have had this kind of opportunity in an educational program when I was in school," says Thomas Tulodzieski, KeyBank Akron/Canton District president, who presented a gift from Key Foundation (Cleveland, Ohio) in support of the program to University President Carol A. Cartwright.

 

"The level of professional-skills development and training that coincides with academic study in universities today really positions students to enter the work force and be fully productive within highly specialized roles," Tulodzieski adds.

 

This year's portion of the $500,000 multiyear leadership gift from Key Foundation will be used for the KeyCorp Financial Communication Center adjacent to the trading floor. The communication center will serve as the nerve center for the computer hardware and data links and will house the KeyCorp Trading Floor director, who will oversee daily trading operations.

 

A number of other industry vendors have provided substantial discounts and gifts-in-kind to support the creation of the Financial Engineering Trading Floor. Trading Technologies, for example, will provide use of its "TT" system, and Hewlett Packard has provided high-end PC and server systems, as well as racking and data communications equipment.

 

"Industry support for these financial education initiatives is strong," says Dr. Frederick W. Schroath, associate dean of Kent State's Graduate School of Management. Professionals from leading investment banking firms - including the Chicago Board of Trade, Bear Stearns, Goldman Sachs, Lehman Brothers, Salomon Smith Barney, Trading Technologies, Prebon Yamane, Morgan Stanley, Foley & Lardner and Asia West Consulting - are joining with corporations such as KeyCorp and FirstEnergy in Ohio to serve as members of an advisory board for the M.S.F.E. program.

In addition, the Chicago Board of Trade Educational Research Foundation presented a $1.2 million gift to Kent State to help sustain its academic leadership in the field of financial engineering. With this gift, faculty from the university's M.S.F.E. program will coordinate the foundation's annual symposium, continuing a 25-year tradition that has attracted academics and practitioners from around the globe.

 

The financial engineering program is one example of the significant research collaborations in which Kent State mathematical and computational scientists are engaged. "Testing the theory of applied mathematics in the crucible of futures and options markets provides a critical validation of their work," says Dr. Joseph H. Danks, dean of the College of Arts and Sciences.

 

The first class of M.S.F.E. students, now well into their second semester, stands out in several ways. First, 62 percent of the students in the financial engineering master's program have already earned advanced degrees; several hold Ph.D.s. On average, these students have 10 years of work experience. Their undergraduate backgrounds range from physics, engineering and mathematics to management information systems and business administration.

 

"I was looking around at what to do with my physics degree and found that many physics Ph.D.s were going into the financial world and becoming very successful at it," says Dennis Jarecke, a financial engineering student who received a Bachelor of Science in physics from Southwest Missouri State University. "I am impressed with the program because it contains both the practical trading side and the theoretical foundations of financial mathematics."

 

As the pace of financial innovation continues to accelerate, the need for experts with these highly specialized skills also accelerates. Kent State is ready to help meet that need.

 

For more information, visit http://business.kent. edu/MSFE or contact Holder at (330) 672-1210 or e-mail mholder@kent.edu.