Congratulations on becoming our Chair of Finance. How does it feel to hold this position?
Holding an academic chair in a University like the University of Edinburgh is something I think many people probably aspire to when they start off on their PhD studies, it was certainly the case for me. Hence, becoming a Chair of Finance at the University of Edinburgh feels like a dream come true. I also feel gratitude towards all the colleagues, co-authors, mentors, who have helped me since the start of my academic career, including my PhD students, whose trust in me and hard work played a huge part in my receiving the chair in 2020.
Can you give a brief summary of your career to date, and the journey that brought you here to us at UEBS?
I have an undergraduate background in the sciences, because I was in a science and technology-focused class during my high school years, although I had always felt drawn towards financial economics broadly, but most especially the economics of financial markets. Perhaps this contributed to my moving quickly towards working in business management following my graduation from Yaba College of Technology. Within a few years of graduation, I decided to study for a master’s degree in the UK – at the University of East Anglia. That was where I met Andros Gregoriou, my first PhD supervisor, who encouraged me to pursue a PhD in a rather specialised area of financial economics known as market microstructure. I was lucky to get a funded studentship at the time, and an offer to join Edinburgh immediately after my PhD in 2012. I have been here since then.
Can you give a layman summary of what you’re going to be presenting during your Inaugural lecture? What do you hope that people take away from the lecture?
In the lecture, I shall be discussing how the search for value by traders in financial markets has pretty much upended how markets work today. Decades ago, in order to generate positive returns through trading in financial markets, you would be expected to analyse financial data and market trends as they emerge from a company’s business activities to identify profit making opportunities. These trends that one unearths from intelligence gathering is known as ‘private information’, and by exploiting it to trade with first ahead of other traders, you are compensated.
For example, if the private information suggests that a share price will rise imminently, you will do the smart thing and buy the share ahead of the price rise, and then sell following the price rise – so you make a profit based on the private information. The profit is your compensation for putting in the work to gather intelligence. You also help the market uncover new information, because as you trade with the information, others catch on and start following your lead. This is beneficial for financial markets.
As we have private information, so we have ‘public information’, which may come in the form of, as an example, the Bank of England raising the cost of borrowing, which may have a downward pull effect on the price of certain share prices, or an aggressor country invading its neighbour, which may affect the cost of certain commodities like oil and gas. Everyone can observe these information sets at the same time, but traders will have varying levels of speed in reacting to them. Today, for an increasingly influential class of traders, all that is needed to turn a handsome profit is to be faster than other traders in exploiting ‘public information’. This is why most of the trading taking place in financial markets today is done by autonomous trading engines or algorithmic traders – basically codes of computing programmes that can interpret information signals from news etc., and use the information they glean from the signals to trade quickly. My lecture will examine the channels through which this development affect how well financial markets work. I hope by doing so I can help people appreciate the factors influencing the value of the retirement pots a bit better – because all retirement pots in a modern economy like ours are susceptible to the vagaries of financial markets.
How excited are you about the collaboration of teaching and researching between EFI and UEBS?
The simple idea underpinning EFI is that the biggest challenges society faces can only be adequately understood and/or addressed when we apply interdisciplinary lenses to them, and this is an idea UEBS is committed to as well, with its support for interdisciplinary pursuits in the development of innovative degree programmes like the MSc in Finance, Technology & Policy and the establishment of research centres like the Edinburgh Centre for Financial Innovations.
Through initiatives like these we are addressing real-world challenges and helping inform business, policy and regulatory responses to them. We develop our degree programmes such that they are challenge-led and research-driven, and we focus our research on engaging with the big questions, ensuring that focusing research on societal challenges become the norm. This in no way dampens our desire to engage in ‘blue sky-type thinking’, it simply means that we creatively channel our full range of expertise to obtain meaningful outcomes – meaningful in the sense of helping to make society better. I am very excited about what we (EFI, UEBS and other parts of UoE) are working towards.
What do you enjoy most about your teaching and research? What challenges/excites you across both?
The most enjoyable part of my job is teaching, I am lucky that I almost always get to teach students who are just getting exposed to market microstructure theory. It is a privilege to watch them develop in understanding and confidence over the course of a semester, and the best part is when I get to read their assessment submissions and course feedback – it is a good feeling to know that I have positively influenced their learning experience. The most challenging part is ending the course each year, it is difficult not to feel a sense of loss knowing I shall no longer be seeing and engaging with them the following week as a class. For some the final lecture may be the last time we speak in-person.
The most exciting part of my research is trying to characterise data generating processes, especially when the data generators are not human! And the most challenging part is having to admit that I have done all I could to address a research question – I often always feel there is an improvement I could make.
What advice would you give young GB, about to leave home and embark upon further education?
Be kind to yourself and others, even in the face of adversity.
What one book, piece of music and beloved item would you take with you to a Desert Island?
|Book||A Promised Land by Barack Obama.|
|Music||I should need two here, the first is ‘Cock Crow at Dawn’ by Bongos Ikwue, because it anchors me to my childhood, and ‘Für Elise, Bagatelle Number 25 in A minor’ by Ludwig van Beethoven, for its wistfulness and calming effect.|
|Beloved item||My running shoes.|