Students get low-down on high finance

THERE WAS just one thing missing from the University of Limerick’s virtual trading floor, said Niall FitzGerald, the Irish deputy chairman of Thomson Reuters, as he officially opened the facility, “the adrenalin rush that comes from realising you’ve lost €50 billion rather than €5 billion”.

The trading floor is a high-tech room in UL’s Kemmy Business School housing 24 computers – each with four screens adorned with share price graphics, stock tickers and company data, but no real money. The first of its kind in Ireland, it will allow UL’s computational finance and financial services students to perform simulated trading exercises, as well as provide professional education to employees of IFSC firms.

But Mr FitzGerald, the former chief executive of Unilever, told the postgraduate students that he was no fan of the reckless, ego-driven, self-interested financial markets. “As I’ve just opened a trading floor, you might think that’s a curious thing to say,” he said. But trading for trading’s sake was what led to the financial crisis, he explained.

Instead, the next generation should trade in order to build responsible, risk-aware businesses, not purely for profit.

First of all, more members of the current generation of directors need to step aside, however.

Mr FitzGerald’s lecture to students came with the ambitious title “Restoring Trust in Business” – a much harder task than losing it in the first place.

The event was a homecoming for Mr FitzGerald, who grew up in Limerick, but it was one marked by tragedy. A bereavement in the family – the death of his nephew – meant he had considered cancelling his address. But his sister had urged him to speak as planned with the passion that he had for his subject.

“We’ve witnessed not only an economic failure in my view but a moral failure,” he said. “Some people have gone, others need to go. There are people who have genuinely made mistakes and we must not pursue people purely because they made mistakes . . . but if they’re not prepared to admit it, if they’re not prepared to be accountable, then they have no places on the boards.”

Mr FitzGerald was once a non-executive director of Bank of Ireland, but that was “a long time ago” (the 1990s). Last week, he had an “uncomfortable” exchange over dinner with friends, all of whom still sit as non-executive directors of banks.

“I told them: ‘You have to make a choice. Did you not know what was going on? If you didn’t, you must ask yourself, are you a competent director? And if you did know, you were complicit in recklessness and fraud. So which is it? Because there isn’t anything in between’.”

Bank directors can’t blame the securities and collateralised debt obligation (CDO) traders: “Decisions were taken in boardrooms. They weren’t taken by fancy automated trading systems and, until you own up to it, you can’t get the seeds of the corrections you need.”

Mr FitzGerald asked students a “blunt” question: “Why are you here? Why are you chasing a career in business? Why would anyone in their right mind want to choose a career in business?”

But the uncomfortable silence that descended on the lecture hall as the audience contemplated their life choices soon lifted.

“Paradoxically, I can see no better time to come here and study business,” Mr FitzGerald added.

But having a sense of personal accountability is one thing. David Murtagh, a trader at IFSC firm Susquehanna (an early investor in UL’s trading floor) suggested another attribute that students should add to their CVs if they want to make their virtual experiences real. “It helps if you’re a good poker player. Good poker players tend to be very suited to trading.”