AIFMRM PhD Student Fellowships

AIFMRM invites applications for PhD Student Fellowships. The application deadline is 15 November 2017 and appointments are for as soon as is feasible (late applications will be considered until all positions are filled). The tenure of the fellowship is for three years. Applicants must have a Master’s degree in economics, finance, computer science, statistics, financial mathematics, or closely related fields.

We are looking for enthusiastic PhD students with a Master’s degree in economics, finance, computer science, statistics, financial mathematics, or closely related fields. We offer a three-year, fully funded fellowship of R190 000 per annum. Research support is available, e.g. for conference travel and publication costs. We encourage and actively support PhD Students to undertake internships either in the financial industry or with regulatory authorities and central banks during their PhD. AIFMRM has an extensive set of collaborations with leading universities in Europe and the USA and we encourage students who want to broaden their academic horizon to spend a semester abroad during their PhD. Download the AIFMRM PhD Student Fellowships advertisement

Women in finance need role models to break glass ceiling

Women are increasingly choosing finance as a career option, but more work is needed to encourage them to pursue postgraduate study and leadership positions. Could increased access to positive role models hold the key?

Young South African women need exposure to strong role models in the financial industry if gender imbalances are to be corrected, say industry leaders.

Tanja Tippett, an Investment Manager at Old Mutual Investment Group and Adjunct Associate Professor in UCT’s Faculty of Commerce, says more interaction is required between influential women in finance and female students at secondary and tertiary education level.

“There has been an improvement in the number of women studying commerce undergraduate degrees, but even so we still see very few continuing to postgraduate level,” said Tippett. Around a tenth of the university’s Master’s students in finance are women, she says.

Tippett was the organiser of the Women in Finance event at UCT on 17 August. The event aimed to expose female undergraduate students to successful role models and pique their interest in postgraduate study – and in so doing, help correct the gender imbalance both in higher education and in future career choices, says Tippett.

Speaking at the event, held by the African Institute of Financial Markets and Risk Management (AIFMRM), female leaders from a number of leading financial institutions including Liberty Life, Rand Merchant Bank, Old Mutual, Nedbank, MMI, Thomson Reuters and Absa discussed the prospects for women rising in the ranks of finance.

A recurring theme in the recollections of many female industry veterans was the need for courage in a largely male-dominated field, despite increasing evidence that diversity is not only beneficial but necessary. Tippett cited the recent MSCI Japan Empowering Women Index (WIN) developed by MSCI, while Thomson Reuters data scientist Reona Bassudeo noted data suggests that greater diversity is essential to survival.

Overall, South Africa has made strides in its attempts to improve gender diversity. An earlier Grant Thornton International Business Report found that already in 2013, South African businesses were among the leaders when it came to planning to hire more women.

However, the most recent Grant Thornton report found that the glass ceiling remained at higher levels: a global trend of poor gender diversity improved by a scant one percentage point since 2016, with just 25% of senior roles held by women.

In the finance industry specifically, South Africa has some powerful women in finance. Gill Marcus, Maria Ramos, and Nicky Newton-King have all made their mark. In terms of raw numbers, however, representation remains skewed.

A 2016 Women in Finance report by Oliver Wyman, which covered over 100 interviews in over 20 countries, found that in South Africa, 27% of exco members in financial services were women. Nonetheless, despite this lopsided representation, South Africa outperformed numerous other countries.

Tippett argues that a more gender diverse finance industry will be advantageous to all. “Women bring a distinct element to a field that has traditionally been male-dominated,” she says. “It is beneficial to bring people into the workforce who think differently or have an alternative approach to problem solving.” Tippett’s view is supported by a well-known McKinsey study which found that companies in the top quartile for gender or racial/ethnic diversity were more likely to have financial returns above their national industry medians.

Researchers at Harvard agree. According to Bloomberg, Harvard research indicates that globally, female leadership is “stuck in the single digits.” Yet a CSRI review of over 2,000 companies found that in the actively managed fund business, female managers consistently outperform their peers. “Several academic studies conclude that women have better performance – on both an absolute and a risk-adjusted basis – than their male counterparts,” the report noted. According to a Goldman Sachs study, there’s a biological reason: the higher the testosterone level, the greater the chance of more frequent trading – which eats away at returns.

Tippett believes finance is an increasingly viable career option for women and that with support and positive role modelling – as well as leadership that shows how to overcome common challenges – the gender imbalance has a better chance of continuing to improve.

There is also growing support among women within finance careers, for instance, events and networking opportunities arranged by the Women in Finance network.

Panellist Anel Bosman, ME: Markets for Nedbank CIB, encouraged young women to jump at any and every opportunity. Growing up, her career options were “to become a teacher or Girl Friday,” she said, but selling beauty products as a teen gave her a taste of independence – which set the tone for a lifetime of wanting more from her life.

Judy Faure, Chief Risk Officer for Old Mutual Emerging Markets, said it was important to be flexible about family roles. The support of her spouse and family was essential, she said. “For many years there was the notion that there are only so many positions for women in a company, which perhaps exacerbated competition between women rather than support,” said Co-Head of Investment Banking, Emrie Brown. “That is beginning to change.”

New master’s offering combines fintech and entrepreneurship

The University of Cape Town (UCT) is now the first university on the continent to offer a specialisation in its Master of Philosophy degree that is specifically designed to equip students with the necessary skills and knowledge to embrace the technological revolution in the financial services sector.

South Africa’s financial services industry faces a significant challenge: the rise of modern technology, commonly labelled as financial technology, or ‘fintech’, combined with a lack of skilled graduates who are able to navigate this complex new terrain.

The new programme, which will be offered for the first time in January 2018, is a Master of Philosophy in Data Science of Financial Technology.

The programme convener Dr Co-Pierre Georg, Senior Lecturer at the African Institute of Financial Markets and Risk Management (AIFMRM) at UCT, explains, “We are in constant and close contact with the financial services industry and know that it is facing a shifting demand for skills. In the past, companies were mainly looking for advanced mathematical- and modelling skills. While these are still required, by far the largest demand is now for graduates who have a thorough understanding of finance combined with a mastery of modern data analytics and software development expertise. Our students will be able to develop these skills in the two most exciting areas of fintech; machine learning and blockchain technologies.”

Over the past years, machine learning has given the world self-driving cars, speech recognition, and a vastly improved understanding of the human genome. In the financial services industry, machine learning is used to analyse vast datasets, for example, to identify a customer’s credit profile, to recognise profitable companies, or to find an optimal investment strategy. Students in the new UCT degree will master machine learning methods and be able to develop their own applications using these methods.

Since the modern workplace requires a broad set of skills from various disciplines, the new degree is highly interdisciplinary and convened together with the Department of Statistical Sciences at UCT. Associate Professor and Head of the Department Francesca Little outlines the idea behind the degree, “We started the Master’s in Data Science to give students a thorough understanding of the latest methods in statistical learning. This includes the fascinating field of machine learning and artificial intelligence. The idea was to bring together UCT’s ‘best and brightest’ from other departments to design a degree that is truly special. We are delighted to partner with AIFMRM so that we can offer a specialisation in the exciting new field of Financial Technology.”

The other topical focus of the degree is the revolutionary new blockchain technology that is behind new cryptocurrencies like Bitcoin. Blockchain is a broad technology that allows companies to store information in a distributed and cryptographically secured database. This makes it possible to store information in a way that is easily accessible and fully transparent, but completely secure at the same time. The most famous application to date is Bitcoin, a cryptographic currency that recently saw a phenomenal surge in value as more and more applications become available. Other potential functions for blockchain technology range from automated supply-chain management over remittance- and other payment services up to health services and insurance. According to industry participants, consulting firms, think tanks, and government organisations, blockchain has the potential to revolutionise the economy completely.

Georg adds, “We combine all these hard skills from technology and finance and add to them the magic ingredient that makes our degree truly unique: a strong focus on entrepreneurship. Our students will have the skillset to not only work in the financial services sector but to go out and start their own companies using what they have learned. We partner with a Fintech incubator in Cape Town to make sure that students will be embedded in the activities of some of South Africa’s hottest new startups and most exciting fintech ventures.”

“We see extraordinary demand for the degree already,” continues Georg. “Cape Town based students can do the degree part-time. This is quite important to us since we want working finance professionals to be able to complete the degree and acquire the skills to thrive in a changing industry. For students who want to do the degree full-time, we offer full scholarships to ensure that nobody will be excluded financially.”

Georg concludes, “Fintech offers a unique opportunity to transform the industry radically. Young startups are already challenging the incumbents, and our students will be on the forefront of this technological revolution in South Africa. Our focus on entrepreneurship means that we will change the students’ mindset so that they not only want to go out and ‘get’ a job, but create a job – or a hundred.”

Further information about the degree can be found on the AIFMRM website and on the Department of Statistical Sciences website. Applications close on 31 October 2017.

For questions and queries, please contact Co-Pierre Georg at co-pierre.georg@uct.ac.za.

Top financial maths students come to Cape Town for international competition

The fourth annual ACQuFRR Financial Mathematics Team Challenge brought students from across the world to the University of Cape Town (UCT) to participate in an event that has become a highlight of the academic financial mathematics calendar.

The prestigious annual Financial Mathematics Team Challenge (FMTC) was held from 18 to 29 July 2017 in Cape Town. It attracted top students and academics from Europe, South America, the UK and Canada and saw them divided into teams, presented with problems and judged on their solution at the end of July 2017.

The winning team led by PhD student Ralph Rudd from the University of Cape Town and mentored by Adjunct Professor Rodrigo Targino from Fundação Getulio Vargas was announced at the end of an intense 10 days of work on real-world financial modelling problems.

“The first challenge was held in 2014 and was an enormous success,” says Professor David Taylor, who heads up the African Institute of Financial Markets and Risk Management (AIFMRM) and the African Collaboration for Quantitative Finance and Risk Research (ACQuFRR) in the Faculty of Commerce at UCT. The annual challenge is jointly hosted by ACQuFRR and University College London (UCL).

“The challenge is an annual event, held during the June/July break. There is talk of having a similar South American version,” says Professor Taylor. “Apart from students and academics getting to know each other and collaborating on financial mathematics problems, the challenge also prepares students for corporate scenarios they will encounter in industry once they enter the business world.”

The 2017 winning team came up with a solution on risk parity, with a real-life application for investment firms building portfolios for investors, in which risk is allocated in a different way and presents investors with new opportunities to offer to their clients.

“The judging was incredibly narrow,” says Rudd. “There was such a high level of competition but I like to think that what gave us the edge was that our presentation was very polished and solid.”

Professor Taylor says the challenge mimics the environment that industry professionals face every day. “One of the things we have noticed over the past two years is that employers are starting to look for employees who have participated in the team challenge,” says Professor Taylor. “The kind of environment the challenge mimics is close to real life, where there is also often not a lot of time to solve difficult problems.”

In addition to UCT, the 2017 FMTC attracted students and mentors in financial and insurance mathematics from University College London, University of Technology Sydney, ETH Zürich, University of Vienna, McMaster University, Fundação Getulio Vargas and Freiburg University.

It was mandatory for each team member to participate in the final presentation and at the end, the winning team was announced and awarded a floating trophy.

Glen Point Capital LLP, a London-based hedge fund, contributed one of the research problems as well as partial sponsorship of the 2017 challenge.

The atmosphere during the challenge is tense and teams are encouraged to focus on their problem with as little distraction as possible. The amount of work each team does is equivalent to a master’s dissertation and many of the challenges have gone on to inspire research publications. In this sense, it ties in closely with the mission of ACQuFRR, which is to advance the theory and application of modern, quantitative, statistical and mathematical techniques to the modelling and risk management of financial products and markets. ACQuFRR strives for technical excellence as well as developing research capacity and applying techniques to African and South African data.

“The world is becoming more and more mathematical,” says Professor Taylor. “Initiatives like the challenge not only help to develop links with international postgraduate students and academics in the field but also allows students and prospective professionals to flex their mathematical and financial muscles.”

Enabling students for the rapidly evolving challenges of the financial sector

UCT’s African Institute of Financial Markets and Risk Management (AIFMRM) continues to strengthen its talent base with the appointment of a new senior lecturer.

In its continued drive to address scarce skills in the finance sector and produce qualified graduates who are ready to take on real-world demands, AIFMRM recently engaged the services of Dr Abhik Mukherjee as Senior Lecturer on the MCom in Risk Management of Financial Markets.

Abhik hails from India and has a PhD from the École Polytechnique Fédérale de Lausanne (EPFL) in Switzerland. With research interests that span banking, macroeconomics, monetary policy, and corporate finance, he is bringing his extensive knowledge of the global business environment to bear on what he terms the “very dynamic financial sector where changes, particularly in emerging markets, occur rapidly and unexpectedly”.

“In this particular field, people must be agile and able to think on their feet to design new solutions and effect constructive changes,” he says.

Though he has only been active at the Institute since mid-March, Abhik says he has dived into the deep end with lecturing and research. He says it is exciting to be involved in a programme that is working so closely with industry to develop industry-ready students. “It is stimulating to experience the actual extent of that collaboration,” he says. “I find it vital to prepare students for the many, and rapidly evolving, challenges of the sector.”

AIFMRM offers two degrees; an MCom in Risk Management of Financial Markets and an MPhil specialising in Mathematical Finance. Both are designed to provide students with extensive opportunities to engage with industry practitioners and financial services companies including AIFMRM’s corporate sponsors. Students are encouraged to develop critical thinking and analytical reasoning, considered essential for operating in the volatile financial industry in South Africa and on the rest of the continent.

“Students are acquiring additional skills not only regarding technical knowledge, but also in their ability to ask questions, and probe deeper into issues – this is essential if our graduates are to be able to make the transition from the Institute to the real financial world. Imparting analytical and critical thinking skills is the cornerstone of our curriculum design.”

Abhik comments that graduates of the programme have spoken about how it has eased their passage into the industry. “We seek to ensure that the transition is not the chasm it so often is in many parts of the world, but a relatively easy step because of the solid foundation they receive at the Institute.”
In addition to his teaching commitments, Abhik is exploiting the many advantages the Institute offers, such as the flexibility of research and the amount of coaching work. He is also an advisory member of the African Collaboration for Quantitative Finance and Risk Research (ACQuFRR), the research arm of AIFMRM, and his research aims to determine the most productive financial policies to promote economic growth – of vital importance to South Africa’s currently shrinking economy.

“It is not always immediately obvious, what impact various regulatory, political, social issues and events exert on the economy and its growth,” he points out. “The challenge is to quantify the effects and gain a better grasp of potential outcomes and in so doing, to contribute to improved policy-making. The biggest hurdle is obtaining good data and then drawing the causal link between the elements.”
Currently, his research is focused on two themes: 1) The interactions between the financial sector and the real economy – specifically, how regulations and monetary policy affect different parts of the financial sector and consequently the economy; and 2) international capital flows via the financial sector and its impact on emerging economies.

“Much of this has not been undertaken before in South Africa,” he says. “The landscape is rapidly evolving in this space, and my research aims to further the understanding of these complex interactions and contribute to the policy debate.”

Beyond this, Abhik’s goal is also to enhance the visibility of the Institute, which he points out is the only one of its kind in Africa. “In many ways, we are at the forefront of research in Africa and South Africa, and we need to promote the many opportunities that are available so that we can attract influential researchers from all over the world.”