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I am teaching the The Fintech, financial innovation and disruption course at IBA for the Spring 2021 term to the MS Finance cohort.

We take a somewhat cynical opportunity evaluation framework to walk through opportunities to disrupt banking, trading, insurance, modeling, scoring and data related markets with a local context.

When it comes to Fintech innovation and disruption what is required, who will provide it, who will oppose it and if you are party to the argument, what should you be aware of?

The course page is still a work in progress but will gradually take shape here as we post lectures, assignments and notes from class discussions here.

Lecture One. Monday. 25th January 2021. Introduction. Why is Fintech hard?

https://youtu.be/6T05PKb_j88

Why does he hate the word Fin-Tech? Why does the convergence of finance, innovation, technology, networks and disruption deserves a deeper treatment? How big is the payment systems opportunity in Pakistan? How big is the e-commerce payment processing opportunity in the same context? What is the difference between the two? Is there a framework that you can use to evaluate opportunities across banking, insurance, scoring and alternate asset classes? Who has the edge? The challengers or the incumbents? What does the moat around banking and financial services looks like in Pakistan from the perspective of challenger entities?

Assignment #1. Flash Boys and IEX Origins.

In March 2014, Michael Lewis’ Flash Boys hit bookstores across the world. It sold 300,000 copies in its first three weeks and generated intense controversy given the book’s laser sharp focus on the dark side of High Frequency Trading or (HFT) for short.

Among the many themes covered by the book is the origin story of IEX. An exchange that marketed itself not as the fastest, but one with built in speed bumps. If you are interested in trading algorithms and HFT, you should grab a copy of Flash Boys and read it cover to cover. But for the purpose of this class, here is the list of selected videos and articles on the book and the themes covered in the book.

Here is the assignment. Using the materials shared below, take a side (for or against HFT) and submit a one-page response on the position take by Flash Boys and IEX.

Is there something fundamentally wrong with HFT trading in terms of order latency arbitrage? Yes or No?

This is an individual assignment. You have to take an absolute position or side. There are no grey areas. Submission deadline is Wednesday morning 8 am on 3rd February 2021. Your response cannot be more than a single page.  

If you use a source or materials pleas cite all your sources on a separate page from your response under a clearly marked reference section.

Please use the following protocol for naming your files. IBAFintech-YourNameOne – where YourName would be your first name. Please email your submission to me at [email protected]

Best of luck and enjoy.

Video resources – Flash Boys IEX case study and assignment. 

  1. Michael Lewis – Leading Voices – https://youtu.be/DWQKPV2xQ3g  – 58 minutes
  2. Michael Lewis – Charlie Rose – https://www.youtube.com/watch?v=CkkQkMlaZpc – 51 minutes
  3. An evening with Michael Lewis and Brad Katsuyama – https://youtu.be/7Olf2TiuAos – 1 hour 18 minutes
  4. The market had become an illusion – 18 minutes – PRI Conference. Introduction to Thor. Brad Katsuyama  – https://www.youtube.com/watch?v=0eqqCwhPlyU
  5. Bloomberg Quick Takes – Michael Lewis – https://youtu.be/I0Yx7RnHAcw

Flash boys IEX – Articles and reactions – 

  1. https://www.vanityfair.com/news/2015/03/michael-lewis-flash-boys-one-year-later
  2. https://www.theguardian.com/business/2015/apr/03/michael-lewis-i-knew-flash-boys-would-be-a-bombshell
  3. https://newrepublic.com/article/112209/michael-lewis-goldman-sachs
  4. CNBC – Michael Lewis – Markets are still rigged. https://www.cnbc.com/2015/03/23/flash-boys-michael-lewis-markets-still-rigged.html
  5. https://www.aspenwords.org/michael-lewis-riffs-on-wall-street-flash-boys-and-his-first-meeting-with-president-obama/
  6. https://financetrainingcourse.com/education/2014/04/is-high-frequency-trading-hft-the-same-as-front-running-michael-lewis-makes-it-official/

https://financetrainingcourse.com/education/2018/12/fintech-in-frontier-markets/

https://ocw.mit.edu/courses/sloan-school-of-management/15-s08-fintech-shaping-the-financial-world-spring-2020/