In today’s complex, global, 24/7 markets, financial engineers are in high demand. But not just any financial engineer will do.
As financial markets move at higher speeds and grow more interconnected, events or actions in one sector can quickly propagate into others, reaching across old boundaries, breaking the traditional “firewalls,” and – most importantly – making consequences increasingly difficult to predict. Especially when viewed in the wake of the 2008-2009 financial crisis, the gap in our understanding of these new risks and complexities is a headline concern.
As a result, today’s financial engineers must possess a comprehensive understanding of the financial system as a whole – in other words, a unique and rare financial “systems” perspective. They must be able to identify and minimize the risks of financial contagion that arise from the heightened interconnectedness of the international financial system by understanding how the financial markets work and using mathematical knowledge and computer skills to uncover patterns and exploit them.
Through the School of Systems & Engineering (SSE), Stevens offers a well-developed Financial Engineering curriculum focused on developing these specific skills, equipping the next generation of financial engineers to excel in the industries which are most affected by this new landscape, such as investment banking, risk management, securities trading and portfolio management.
The program’s key feature is its unique “systems” philosophy, which provides students with the full array of skills and knowledge future professionals need to succeed in the ever-changing finance sector.
“We take a systemic approach to matching seemingly unmatchable concepts of finance and its analytical and technological properties,” said Dr. Khaldoun Khashanah, director of the Financial Engineering program.
The Stevens Financial Engineering program caters to students who have undergraduate or graduate degrees in a variety of disciplines – including engineering, science, finance, economics, computer science, software engineering, information systems and systems engineering – and a desire to conduct financial research, create financial instruments, or practice in the financial sector. Stevens Financial Engineering graduate study includes a M.S. program, a four certificate program, and a MBA program offered in conjunction with the Howe School of Technology Management. Stevens is also the only university in the nation to offer a Ph.D. in Financial Engineering, a program that launched three years ago and currently enrolls eight students.
Whatever the level or program of study, the Financial Engineering curriculum focuses on three distinct areas – quantitative, systems and management, and software and technology. The combination ensures students gain mastery of the tools of applied mathematics, computational techniques, statistical analysis and economic theory, with an emphasis on tools and training in stochastic modeling, optimization, and simulation techniques. It builds sharply-honed practical skills and strong technical skills, enabling students to make pricing, hedging, trading and portfolio management decisions with ease.
In addition to coursework, the program integrates the Financial Systems Center (FSC) into the learning experience, allowing Financial Engineering students to test their algorithms, black boxes and theories.
“The aim of the FSC is to broaden the meaning of finance as a discipline beyond its traditional focus on capital structure, asset management and portfolio returns and to encompass the new regulatory, risk, and technology management perspectives that are increasingly required to ensure successful outcomes in a global systemic framework,” Khashanah said.
Graduate student Shreyas Kulkarni, who works as a treasury manager for a major multi-national technology firm, said the Financial Engineering program taught him to analyze an overall financial system, including instruments, markets, agents, deals, mechanics and regulatory framework.
“The financial system by itself cannot be accurately defined and it is impossible to decipher its complexity,” he said. “But the Financial Engineering program recognizes its complexity and equips students with necessary skills to unravel it. It really helped me understand the intricacies of the financial markets' mechanism and its major market participants.”
Kulkarni said he uses knowledge gained in one especially relevant course – “Systemic Risk & Financial Regulation,” which drills down into the regulatory aspects of financial markets – every day at work, where he is driving a key project which involves implementing a clearing and settlement platform for over-the-counter products as mandated by the Dodd-Frank bill.
Kulkarni also said the course, “Special Problems in Financial Engineering,” helped broaden his overall knowledge and analytical skills.
“It helped me to a large extent since it is an open ended course, and I opted to work on a topic which involved a lot of research in areas of regulatory framework and specific industry mechanics,” he said.
Dan Socaciu, a part-time student who is a technology professional at a major securities firm, said the Financial Engineering program stands out in how it develops students’ ability to synthesize theoretical knowledge in realistic portfolio construction and conduct portfolio risk assessment and management.
“The theory-based courses take real world findings and describe them using mathematical models,” he said. “It gives an interesting perspective to see how market reactions can be explained with statistics and formulas.”
Socaciu added that the mix of theoretical and technical courses greatly enhanced his understanding of all aspects of the sector.
“The courses on financial products and markets give background with regards to why and how things are priced certain ways and why products and markets exist, which is paramount in order to develop new algorithms, products and analysis,” he said. “The computational courses teach programming languages are used in finance and give plenty of coding practice.”
Both students said the program was critical in helping them launch their careers in the financial industry and excel on the job.
“The program has definitely helped me a lot, especially in getting a job,” said Kulkarni.
Learn more about the Stevens Financial Engineering Graduate Program.