Trading Spaces, B-School Edition

For many B-schools, a flashy "trading room" is the centerpiece of finance programs and a high-profile recruiting and fund-raising tool

by Kerry Miller

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The stock market is making a comeback—look no further than your local B-school for proof, where campus trading rooms are becoming more popular than ever.

Trading rooms first appeared on college campuses 10 years ago, when MIT's Sloan School of Management opened its facility in early 1996. Another trading room opened at the University of Texas, Austin's McCombs School of Business just a few months later.

Since then, more than 60 business schools, both grad and undergrad, have built trading rooms. And according to the hardware and software vendors who outfit the labs, most of that growth has occurred within the past two years.

Fundraising Gold

In truth, "trading room" is a misnomer. It's really little more than a standard computer lab gussied up with dual-screen monitors, financial software, and flashing stock tickers. The goal isn't to create a campus full of day traders, but rather, to house electronic sources of financial and investment data for simulations or research—no actual trading occurs.

Trading labs are used as classrooms for finance courses in investing or futures markets, a place where students can analyze real-time and historical financial data or use software to build and test investment portfolios. At many B-schools, the labs also serve as home base for the MBA program's student-run investment fund, as well as a facility for faculty research.

Besides their primary purpose—providing hands-on learning experiences for students—schools have seen that the trading rooms are useful marketing, development, and recruitment tools. As the cost of technologies such as LCD screens and personal computers has decreased, the overall cost of building a trading room has also gone down. That means trading rooms are proving to be increasingly cost-effective ways to recruit students and faculty, and to impress corporate visitors and alumni.

Paying Attention

Several schools have also found other lucrative ways to open up their trading labs to the community. Bentley College, for one, uses its trading room to host a summer camp for high school students called Wall Street 101, introducing them not only to the exciting world of finance, but also to Bentley College. As Bentley can attest, a top-notch trading lab can also go a long way toward enhancing the reputation and prominence of a lesser-known business school.

The trading-room boom also reflects the strong job market in the finance world. Finance positions are the most in demand for 2006, according to the latest Graduate Management Admission Council's Corporate Recruiting Survey. Beverly Hadaway, director of the EDS Financial Trading and Technology Center at McCombs, says one of the original aims of the school's trading room was to attract the attention of Wall Street recruiters, an initiative which she says has been "highly successful."

Many schools are banking on trading labs to give their students a leg up in the job hunt, by allowing them to earn certifications in financial software, such as Bloomberg, or manage real money in a student-run investment fund. "When we graduate, companies want to know how you can contribute, what value you can add," says Bentley College junior Arman Salavitabar. The trading room gives you that value."

Dress Rehearsal

The financial simulation software developed for trading labs has also made it possible for B-school students to show off their trading skills at events such as the Rotman International Trading Competition at the University of Toronto's Rotman School of Management, where teams compete against each other on various case scenarios.