FINC 6015: Trading in Modern Financial Markets A trading report (20%) “An analysis of topical issues in today’s financial markets” Final Report Due Date: by 5pm, 22 October 2021 [Note: Only one (1) soft copy of the report to be submitted to Turnitin by one (1) member of your group] Number of students per group: 5-6 Maximum number of pages: 8 A4 pages Task: There are several challenges that trading participants face when attempting to trade various asset classes in today’s global market. Your task is to provide your perspectives on topical issues in trade with the support of academic literature and key insights drawn from the Rotman Interactive Trader (RIT) “trading games.” Specifically, you are required to address the three questions below. Topical issue 1: The difficulties of being a dealer (or market-maker) in today’s market [Weighting 60% of total marks] Part 1: Are dealers beneficial for markets? Do they really supply liquidity? Part 2: Volatility is one of the most prominent terms you’ll hear on any trading floor. In financial markets, volatility captures the amount of fluctuation in prices. High volatility is associated to periods of market turbulence and to large price swings, while low volatility describes more calm and quiet markets. For a market making firm in options, accurately predicting volatility is essential for the trading of options whose price is directly related to the volatility of the underlying asset. Realized volatility can mean the difference between losing and winning. What factors would you use to build a model to optimize how to predict short-term volatility in two different market sectors? [Note: You will need to provide the reasons for your chosen factors with academic related evidence where appropriate] Topical issue 2: A regulatory suggestion to reduce predatory HFT trading in markets [Weighting 40% of total marks] There are several opponents to the practice of High Frequency Trading (HFT) that has proliferated global markets. Academic and anecdotal evidence suggests that predatory HFT strategies are detrimental to markets. What regulatory changes would YOU suggest to help prevent predatory HFT in markets? [Note: The question requires a suggestion of a regulatory change from you that current does NOT exist in the market] How should your trading report be structured? The presentation style for the trading report should be: • articulate (i.e. sentences well-written and your ideas clearly expressed), • concise (i.e. not too wordy or rambling), • focused (i.e. to the point), and • direct (i.e. straightforward, not evasive). It is recommended that your trading report is kept simple and to the point. Your references should be easily identifiable. When your group addresses each of the questions, please ensure they are under the following headings Topical issue 1 - The difficulties of being a dealer (or market-maker) in today’s markets Topical issue 2 - A regulatory suggestion to reduce predatory HFT trading in markets You will need to prepare this assignment as a professional report. Marks will be primarily awarded to those trading reports that: 1) Provide sound responses to each question. 2) JUSTIFY your responses to the questions with relevant academic references. 3) Briefly provide key insights drawn from your Rotman Interactive Trader (RIT) experience for question 1 (Part 2) and question 2 [Note: your key insights should be no more than 4 sentences, i.e. a small paragraph] Specific requirements The trading report must not exceed 8 A4 pages (using size 12, times new roman font with 1.5 line spacing), anything exceeding 8 pages will not be marked. The title page, table of contents, appendices and references will not be included as part of the 8 A4 page report limit. Plagiarism is unacceptable at the University of Sydney and rules will be strictly enforced. Copying another assignment is a clear case of plagiarism and WILL BE EASILY DETECTED. Students should adopt a consistent referencing style format (APA 6th). Please see the following website https://libguides.library.usyd.edu.au/citation Penalties: Late reports will be penalized at a rate of 5% of the total available mark per day. Marks will be reduced by 10% for each page that your report exceeds 8 pages. Hence your mark will be reduced to 0 if the report exceeds 18 pages. Students will be penalized for incorrect referencing.









































































































学霸联盟