The annual CME Group Trading Challenge has hosted collegiate teams of traders for 12 years now. Over that time, the event has evolved from a few dozen teams trading two commodity futures contracts to hundreds of teams trading every asset class offered on CME Group’s markets. As significant as the growth has been, nothing has shown the competition’s reach, or influenced the future of trading, quite as much as the increased participation from teams outside the United States.
The 2015 Trading Challenge began in February with 503 teams from every continent but Antarctica — a total of 2,019 students from 226 universities in 37 countries. The previous high for the challenge was 389 teams in 2014. The competition has long had international representation. In earlier years, those teams competed well, but ultimately fell behind some of trading’s collegiate blue bloods like the University of Chicago and Rice University, each of which has had teams win the competition multiple times.
That changed in 2014 when the Polytechnic University of Catalonia (Spain) took the top prize after making over $154,000 on their simulated account balance in just two weeks — $30,000 more than their closest competitor. The international success continued this year when a team from Ozyegin University in Istanbul, Turkey won the competition after adding more than $184,000 to their balance, $44,000 more than the closest competitor. Not only are more international teams competing now, they are changing the look of the leaderboard.
— CMEGroup (@CMEGroup) February 9, 2015
Juan Jaramillo Sanchez, a student from the University of Medellin in Colombia whose team participated in the challenge for the first time this year and made it to the championship round, thinks there are two main reasons for the larger international presence.
“Many undergraduate students see the challenge as an opportunity to demonstrate their knowledge in the futures market and mainly to learn CME Group markets,” he says. “Furthermore, it is a chance for students to be known by successful companies in the industry.”
The latter has proven true over the course of the Trading Challenge. Participants have found jobs at companies like BP, Valero and MBF Clearing after their participation.
Juan Jaramillo Sanchez and Sergio Vasquez Montoya of the University of Medellin
The competition has not always had such wide global representation. It began in 2003, and did not see its first team from outside the United States until the fifth or sixth year when a team from Canada took part, according to Stan Yabroff of CQG, the company that has provided the competition’s electronic trading platform since 2006.
“The factor that led to the increase of the international universities was first and foremost the growth of the internet,” says Yabroff. “At the same time we saw an evolution in the futures market as we transitioned from floor trading to electronic trading.”
The Trading Challenge is in many ways a reflection of this change. CME Group’s real world electronic platform, Globex, has been in place since the 90s, and has long had international users, with access growing to more than 85 countries. International users now make up a larger share of trading volume on CME Group’s markets as well.
In 2014, an average of 2.8 million contracts per day were traded from outside the U.S. on CME Group markets, the highest level ever seen. Non-U.S. revenue accounted for approximately 28 percent of the company’s total.
Curt Zuckert of CME Group, who has worked on the challenge for almost a decade, says the increased level of trading outside the U.S. has trickled down to finance and economics professors overseas, who often serve as the catalyst for a team’s participation and serve as faculty advisors.
“The wider international participation speaks to the volume increase from outside the U.S. in the real market,” says Zuckert.
“That tied in with uncertainty worldwide brings more teams into the competition. There’s more market risk, volatility and volume. It’s a perfect storm of opportunity for a young trader and a great time and place to test what they’ve learned.”
Market volatility was not the only factor driving students to seek a trading competition. CME Group has marketed the challenge to universities over the years through existing relationships with many schools. But to bring the competition to the global status it now enjoys, they expanded their marketing efforts in digital and grassroots activities.
The locations of the 503 teams that participated in the 2015 Trading Challenge
These included marketing to collegiate partners from several areas of their business. The effort has also involved a stronger push on social media and searching for business schools and derivatives courses, and contacting advisors directly.
Zuckert adds that building the legitimacy of the competition has helped too.
“We’re seeing a substantial increase in participation and a lot of that is due to increased accessibility and establishing a robust set of rules for the challenge,” he says.
Student participants interviewed for this story also said the growth of search engines were a primary driver in allowing students to find out about the competition. Google “trading competition” and the Trading Challenge is the first result. It is also one of the few competitions of its size that focuses exclusively on college and university students. For many, the challenge offers their first chance to trade in a live environment.
Ogulcan Cevizoglu, the student leader for the team from Turkey that won the challenge this year, sees the simulated trading experience as a kind of primer for the real world of trading in futures markets.
“People who are interested in trading futures and other financial instruments mostly want to prove themselves and gain experience via this challenge since they have nothing to lose unlike trading in the real markets,” he says.
OzU Invest, the team from Ozyegin University in Istanbul, Turkey that won the 2015 Trading Challenge.
Hao Zheng, the team leader from the University of Western Ontario, agrees and like many in the competition, entered to prepare for his career. “We are really passionate about trading,” he says. “I personally aspire to be a prop trader soon, and my teammates plan to be in finance as well.”
Yabroff says it’s not a surprise that international teams have thrived lately in the competition.
“The future of our marketplace is still growing,” he says. “Our primary function is risk management and that will always be a priority for corporations worldwide.”
“Participation in the challenge is a big commitment for these students. Even though it’s brief, it’s intense, and it teaches what risk management and trading is all about. That’s something that companies are realizing. For the student’s it’s something for their resume beyond a textbook or a case study.”
In addition, there’s still some national pride involved.
“Being the only team from Turkey which manages to be part of the global competitive scene, we, our University and all our families are very proud that we accomplished such an achievement,” says Cevizoglu. “It means that we made our trades with the correct mentality.”