Tag: Olin in the Media



Outside a TD Ameritrade office

A new study finds wide disparities in the prices investors pay when buying and selling stocks through six popular brokerages. 

TD Ameritrade delivered the best prices, and Fidelity Investments, E*Trade and Robinhood Markets Inc. followed. Two trading platforms from Interactive Brokers Group Inc. came in at the bottom.

The experiment “reveals an astonishing dispersion in the quality of price execution across our sample of six brokerage accounts,” the authors write. They found the costs incurred in a transaction ranged from -0.07 to -0.46%, excluding any commissions. The average price improvement varied from 3 to 8 cents a share, which may not sound like much until you consider how many millions of trades people make daily.

14 million trades a day

The five brokers’ daily trading volume is 14 million daily trades, or 3.6 billion a year. The average retail trade of $8,000 translates into $28 trillion traded annually. So, for every one basis point of price execution difference, the annual cost to retail traders is $2.8 billion, according to the research.

“In that context, our observed execution differences are economically very large,” the authors say in their working paper, “The ‘Actual Retail Price’ of Equity Trades.”

“While we were aware that such trading would not be ‘free,’ we were surprised by the range of execution prices for our simultaneous identical trades.”

Huang

The researchers, including Olin Assistant Professor of Finance Xing Huang, bought and sold stocks 85,000 times over nearly six months. At the peak, their trades numbered more than 1,000 a day. They tried to place the same trades simultaneously with different brokers and measured the prices they got.

“Consumers should realize that zero commission doesn’t mean free trading, and the transaction costs could vary across brokers,” Huang said.

“Although we show that the differences are economically large on the aggregate level, the differences may be small on the individual level. While some consumers may be more concerned about other features of brokers, consumers who care about execution prices may be interested in our results.”

Different prices for the same trades

According to the research results, the price dispersion is because off-exchange wholesalers give different execution prices to brokers for the same trades.

“The difference in execution costs between these different brokers is huge, and nobody knows it,” Schwarz said.

Said Huang, “We were quite surprised by off-exchange wholesalers systematically give different execution prices to different brokers, even for the same trades.”

The findings indicate that the current disclosure regime is inadequate and provides limited information regarding the quality of price across brokers. “In practice,” the authors write, “it is very hard to compare the actual retail price execution quality of different brokers.”

The researchers spent their own money on the experiment, and they lost about $23,000 doing the trades, lead author Christopher Schwarz, of the University of California at Irvine, told The Wall Street Journal in a September 16 article.

Their impression was that they couldn’t use their research accounts since the experiment involved trading and uncertain outcomes, Huang said. “We did not want to get any funding from institutions because we didn’t want any potential conflicts of interest compromise our independent opinion.”




For the second year running, WashU Olin has been named one of “10 Business Schools To Watch” by Poets & Quants.

In a recent post, Olin received recognition for two of its strategic pillars—entrepreneurship and global experience—that have been successfully implemented into the curriculum.

“Every course at Olin has to be accountable to entrepreneurship and innovation… That took entrepreneurship from being a really strong niche to something every Olin student is going to be exposed to,” said Cliff Holekamp, former professor of entrepreneurship at Olin.

However, Olin “places equal – if not greater emphasis on global business.”

“Deep global immersion in international business issues, cultures, and practices sets an important foundation for business today,” said Dean Mark Taylor discussing the MBA global immersion trip. “The cohort [also] really bonds as everyone gets to know one another and works together—especially as they begin the program by being thrown into the deep end on the global immersion where, at some point, every student must adjust to a foreign culture.”

P&Q also highlighted Olin’s location, accelerated graduation path, and the option for a STEM-designed specialized master’s degree paired with an MBA.

“We’re leaning into the needs of today’s business students, differentiating WashU Olin by leveraging our unique assets, preparing them to be globally-minded and globally-mobile and providing the tools to confront the challenge and create change,” said Taylor.

Other schools listed alongside Olin included the Dartmouth’s Tuck School of Business, University of Chicago’s Booth, USC’s Marshall, and IMD.

Read more of the P&Q article citing Olin as a top 10 school to watch.




As the passive investing strategy has taken the market by storm, criticism of index funds and common ownership have increased: Are index funds evil (as asked by The Atlantic)? Are they bad for the economy?

Common ownership came under fire last year with a study finding that “airlines compete less vigorously on price because they are owned by the same handful of investors,” writes David Nicklaus.

However, in an interview with The St. Louis Post-Dispatch, Olin’s Todd Gormley, associate professor of finance, provides a defense for companies with higher index-fund ownership: They actually have better governance.

An active money manager who doesn’t like the way a company is run can simply sell the shares. The passive manager doesn’t have that choice. “In their view, the only way they can protect themselves is to make sure there are good governance structures in place,” Gormley said.

Besides, he said, long-term passive investors often back activist hedge funds that attempt to shake up a company. “We found a positive influence on governance,” Gormley said. “The presence of these index funds makes it easier for other investors, the activists, to get into a company and provide discipline over management.”

Gormley was recently quoted in the Princeton Alumni Weekly on the same subject, where he discusses the evidence of some positive effects of passive ownership.

Read the full article on The St. Louis Post-Dispatch and Princeton Alumni Weekly.




The online business education magazine Poets & Quants highlighted members of Olin’s MBA Class of 2019 in an extended profile of the students and the program published on Saturday.

The piece quoted students such as Ashia Powers, who said her visit to campus during admitted students weekend really sold her on Olin’s program: “The community here is everything, and everyone takes pride in it. They made me feel special, important, and valued.”

The detailed article also took note of application and admission trends that resulted in a group of 2019 MBA prospects with strong academic credentials:

Like many American MBA programs, Olin’s 2016-2017 recruiting cycle could be boiled down to fewer applications but higher caliber students. This year, applications fell off from 1,579 to 1,174 – a near 26% drop. Despite this, the class is actually 17 students larger than its predecessor, with an acceptance rate that jumped 10 points to 40%. Still, the average GMAT score climbed seven points to 694 with the Class of 2019 – a score higher than those produced by new classes at small school gems like Notre Dame Mendoza, Vanderbilt Owen, and Emory Goizueta.

The article featured extended profiles of 14 students. “Everyone who comes to Olin has a name and a story,” Dean Mark Taylor said in the piece. “You are well known by the faculty and supported by an excellent staff.”

Read the full story at Poets & Quants.




The MBA Class of 2017 will have a record-breaking number of female members thanks in part to Allison Campbell, MBA’16. Allison tells Poets & Quants about her recruiting achievement at Olin:

“When I joined Olin, my class was 28% female, resulting in over half the core teams only having one female. I wanted to change that. I wanted to implement the personal touch Olin had the ability to offer, especially females.

During my free time, I reached out to prospective students, offering to share my personal experiences. I was talking to at least three people a week, telling my MBA story and answering questions about Olin.

Through Olin Women in Business, I pushed for a new Vice President position to work with the admissions office.  I joined the executive board in this role, and I forged a connection with Admissions to emphasize this focus.  Last spring, I also co-chaired our Admitted Students Weekend.  I stayed in touch with those students over the summer, and was proud to see the female enrollment jump to 40%.

This year, every core team had two female students.  To this day, I continue to work with Admissions to make 40% a rule, not an exception.”

Allison will be an Associate Marketing Manager at Walmart after she graduates.

Read more about Allison and why she is one of the Best & Brightest of the Class of 2016 on the Poets & Quants website.