EDHEC has just inaugurated a state-of-the-art trading room on its Lille campus. The creation of this trading room open to all students of the EDHEC Group is a key element of the educational system deployed in finance, underlines Olivier Oger, CEO of the EDHEC Group. Future executives and leaders must now be trained in these tools from the start of their studies. The finance specialization that they can then choose finds in this trading room a place of experimentation and learning.

Funded by Société Générale, this brand new room will host bank executives to train students in finance. Through 21 dual-screen workstations, they will have access to financial information provided by Six Telekurs (formerly Fininfo) and will thus be able to follow the Chicago, Frankfurt, London and even Singapore stock exchanges in real time!

A tool that is not reserved for an elite

Such equipment does not exist in any other French school, or even European, recognizes Jacques Chrissos, professor of finance at EDHEC. The business school remains one of the pioneers in this area, since ten years ago it already had a trading room. Unsurprisingly, this relatively expensive tool is rather reserved for large business schools, even if we are starting to see it flourish in universities. Thus, two years ago, the University of Évry-Val-d'Essonne inaugurated a trading room for its Master's in Finance. As for the Louis Pasteur University of Strasbourg, it has had a trading room since 2002.

If the trading rooms arouse so many amateurs, it is because they are not only for apprentice traders. Far from the usual clichés, the trading rooms bring together different areas of expertise (trading, sales, financial engineering) as well as the control and support functions inherent in their operations. Today, all major finance functions need to understand price discovery issues. It is therefore no longer the domain reserved for investment banks or fund managers, but concerns all the financial departments and treasuries of companies, borrowers or lenders.

As proof, it is possible for a finance student to work in a trading room elsewhere than in a bank. Some large companies, in particular public ones, have their own trading rooms which have nothing to envy to those of the banks. We are structured like a bank with a back, a middle and a front office, recalls Philippe Lhermie, head of foreign exchange operations at EDF.

A bet on the future?

Over the past 20 years, trading rooms have undergone profound changes. Perhaps the most striking development is their size, which has more than doubled from 850 to almost 3,000 seats for the largest banks, explains Jonathan Morton, vice president of product marketing at IPC Systems (Banking & Internet). Since then, the crisis has been there, forcing banks to review or suspend their investments.

To streamline their operations and achieve significant cost savings, many large US and European banks consolidate several of their trading rooms into one location. This consolidation is beginning to extend to the back office, continues Jonathan Morton. That said, we now see that budgets are on the whole increasing and a good number of companies are beginning to study a resumption of investment in their trading rooms. The fact that some banks go so far as to finance trading rooms on campuses is a rather good sign...