University of Colorado Denver
GEMM 6610: Advanced Financial Management for the Energy Industry
The Global Energy Management (GEM) program at the University of Colorado Denver (CU Denver) is a hybrid-online Master of Science (MS) degree that is equivalent to an energy MBA.
GEMM 6610 is a concentrated course in the program that builds upon undergraduate finance courses. It covers topics energy companies face, including plant expansion, managerial accounting, intellectual property and risk management, and also introduces investor communication techniques.
Professor Jack Mason wanted his students—all of whom are already employed in the energy industry but not yet deeply educated about how to navigate risk—to understand who the players are in the commodities markets, the roles they serve, and how exchange-traded futures and options help the energy industry manage risk.
Engagement with TT
CU Denver’s financial trading lab, the JPMorgan Commodity Center, opened in 2012. It focuses on educational and research programs in commodities markets, regulation, trading, financial fundamentals, investing, risk management and ethics.
TT contacted them when the lab was under construction to see if they would consider becoming a partner school in TT CampusConnect® and incorporating TT’s software in the lab when it opened. They accepted the offer and invited TT to speak and demonstrate the software’s functionality at the lab’s opening ceremony.
Initially, the lab was equipped with X_TRADER®, TT’s client-installed platform. The X_TRADER software was available for students to use and explore at their leisure.
Since the initial implementation, the university has migrated to Trading Technologies’ web-based TT® platform, which requires no installation, implements updates automatically and is accessible from virtually any internet-connected device including desktop computers, laptops, and Android and iOS smartphones.
In 2013, Professor Mason asked Trading Technologies to help him create a commodity market curriculum for the GEM program. TT collaborated with him to develop and launch the course, which is now offered to students in twice a year. The course is taught by TT employees, who are responsible for developing and grading all assignment Also, TT employees trained the students on how to use the TT platform to complete the class assignments.
Students are required to complete three trading-related exercises. Each exercise focuses on a different role:
- Speculators are required to place 50 trades (100 orders) per day with the stipulation that they be flat by the end of each trading day.
- Hedgers are given a projected production schedule for a crude oil refinery and instructed to use futures and options to manage risk.
- Brokers are given a series of orders that they have to to fill throughout the final week of the course.
The exercises and interaction with the TT platform are helping students understand the importance of exchange-traded futures and options for managing risk and speculating. As one student commented, “The time in the trading center was helpful to get some hands-on experience with trading.” Another student echoed, “I really enjoyed our time in the commodities center. It was a nice break from sitting through the typical lectures during cohort weekends.”
The platform’s robust functionality and the access to live market prices make the exercises relevant to the current energy markets, enhancing the students’ understanding of risk management and trading. By seeing how the roles of hedger, speculator and broker dovetail to facilitate risk management, students gain an appreciation and understanding for managing energy production price volatility in their full-time jobs.
As one student explained, “As a broker, your job is to secure the best possible outcome for your client. It is important to have a pulse on the market and what it is likely to do. Clients are looking to you for advice on how to participate in the market. Being a broker requires the ability to watch the market very intently so that crucial opportunities are not missed.”