How is Financial Trading Useful to Society? by Dr Ioannis Oikonomou and Dr Tony Moore from The Henley Business School

Economics/Business: How is Financial Trading Useful to Society? by Dr Ioannis Oikonomou and Dr Tony Moore from The Henley Business School on 20th March 2015 between 11.15 and 12.30

Finance has established itself as one of the most lucrative businesses of the modern world. The key purpose of banking and the financial markets is to efficiently redirect capital from savers (who have a surplus of unused funds at their disposal) to venturing entrepreneurs (in need of those funds in order to create or enhance their business). In this way, a more efficient allocation of resources is achieved and economic activity comes closer to its true productive potential.

Within this framework, the trading of financial assets has become one of the most important aspects of the financial industry with enormous amounts of funds changing hands over the course of a few seconds every single day. But does this practice truly benefit societies as a whole or does it simply serve the interests of people involved in the industry and some entrepreneurs? Does trading serve a broad social purpose? Are specific aspects of it more problematic than others?

The main point of the session will be for students to think whether trading is actually useful for society as a whole and ponder around some of the most controversial issues surrounding this theme. More specifically, three main issues will be explored:

1) Is trading parasitic as it does not produce anything so cannot be inherently useful?

2) Is trading different from gambling?

3) Can algorithmic (i.e. computer based) trading improve the situation or does it make things worse?

Students (with the help of teachers) will focus on some of the above and will concisely present their views in a “video conference discussion” format. They will have to use their critical thinking and apply the information which will be provided in the introductory part of the session. The ultimate aim is for students to learn more about what trading is, how it can be best applied, how and when it can be useful and whether it is relevant to what they would consider studying at the University level.

Suitable for: Year 12 Economics & Business students

Session Leader Biography: Dr Ioannis Oikonomou

Preparation/Pre-reading: No preparation is absolutely essential for this session. However, if students want some “food for thought” and wish to ponder on some the things we will be discussing before the session, the below articles are very useful:

1. What Good Is Wall Street?

2. High Frequency Trading’s Social Utility

In addition, this video provides a quick look into the simulated trading environment of the ICMA Centre, Henley Business School.