May 24, 2005

Preparing college students for real life is a difficult challenge. But Villanova University, as well as a number of other schools, have found a way to make their students ready for the real world of financial services. In turn, the schools hope their preparations will make students more attractive to financial institutions looking for young talent.

Villanova, with the help of Dell, has created a trading floor where its students can simulate trade execution and portfolio management. The trading floor officially was launched in late April and consists of a Bloomberg terminal that provides access to financial data and analytic tools and 16 Reuters workstations with 19-inch flat-screen monitors.

Michael Pagano, an assistant professor at Villanova, teaches a class on market structure, trading, liquidity and financial institutions, and uses the lab as part of his curriculum. Pagano has 10 years of financial services experience, including stints at Citigroup and Reuters. "The floor enables students to simulate a real-life trading environment for both an order-driven market such as the New York Stock Exchange, and a quote-driven market such as the Nasdaq," he explains.

Using trading simulation software, students can act as an NYSE specialist by replicating the limit order book, simulate trading on Nasdaq or even become a buy-side trader executing a large block order, Pagano says. Future plans include adding order routing and algorithmic trading.

Developing trading floors is a growing trend. Among the universities that have established similar labs are Baruch College, Penn State, the University of Washington, Texas A&M, MIT, Carnegie Mellon and Vanderbilt.