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Henley Business SchoolPosition and Prospects

Alumni Masterclass2017

Henley Business School

Henley empowers individuals to become great professionals and

outstanding business leaders who think with clarity and act with

confidence and conviction.

Our strength lies in our approach. We enable people to better

understand themselves and their responsibilities while at the same

time blending the practice and theories of successful business.

An engaging, focused and distinctive business school

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Being a truly international business

school

The excellence of our learning

experience

World-class research and thinking

Our sense of community and

responsibility

The strength of our networks

The breadth and depth of our

relationships with industry

Henley Brand Positioning

Engaging Business

Research CentresSubscription Based Ctrs

Professional conferences

Collaborative events

Alumni

EngagementEvents (including

Webinars)

Master classes

Sponsorship/Funding

Teaching &

Learning Custom programmes

Professional Accreditation

Guest Speakers/site visits

EventsEngaging Business Series:

Keynotes, Breakfast

Seminars, Spotlights

Journalist Day

Executive

EducationHenley Partnership

Open Programmes

Customer Programmes

CareersCareers Fairs

Involvement in workshops

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Rankings

Accreditation Rankings

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• Triple Accredited

o Under 100 of the world’s

16,500 Bus Schools

Good but not yet great

• Full-Time MBA: #27

• Exec MBA: #47

• Exec Ed: #20

• Master in Finance: #40

• Complete UG

o Acc & Fin: 14

o Bus & Man: #28

o Land Man: #1

Teaching, Research and Industry

Allied Health Professions, Dentistry, Nursing &

Pharmac

Psychology, Psychiatry & Neuroscience

Biological Sciences

Agriculture, Veterinary & Food Science

Earth Systems & Environmental Sciences

Chemistry

Mathematical Sciences

Electrical and Electronic Engineering, Metallurgy

and Material

Architecture, Built Environment & PlanningGeography, Environmental Studies & Archaeology:

Archaeolog

Geography, Environmental Studies & Archaeology:

Geograph

Business & Management Studies

Law

Politics and International Studie

Education

Modern LanguagesEnglish Language and

Literature

History

Classics

Philosophy

Art and Design: History, Practice and Theory : Ar

Art and Design: History, Practice and Theory :

Typograph

Music, Drama, Dance and Performing Arts

Overall

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0% 20% 40% 60% 80% 100%

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14

REF

%

2004 REF

Improved

Declined

Research: REF and Industry

REF – Bus & Mgmt (135 entries)

#16 for GPA (up 30)

#10 for Impact

Industry impact

• ESRC on Finance History -

£800,000

• Newton Fund for Energy -

£750,000

• Cabinet Office: reputation

• Deloitte: Tax and Ethics

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Excellent research and thinking

• Henley’s research has always had a strong focus

on policy and practice, as well as pure theory

• Our research centres profile our key themes

John Dunning Centre for International Business

Henley Centre for Customer Management

Informatics Research Centre Centre for Intelligent Places

John Madejski Centre for Reputation

Henley Centre for Entrepreneurship

Centre for International Business History

Henley Centre for Engaging Leadership

The ICMA Centre Centre for Euro-Asian Studies

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Teaching and Industry

• Innovation in teaching

o Started British management education

o First distance learning MBA in the world

• Professional contacts

o Individuals with industry experience

o Connections with over 25 professional bodies

o BSc Accounting with PwC; Huawei Academy

• Corporate Qualifications

o Financial Conduct Authority

• MSc Financial Regulation

o Deutsche Telekom, ING, Roche

• MSc Strategic Marketing

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Research programmes

Phd Programme

Selective

c 200 registered

Good completion rates

DBA Programme

Aimed at Practitioners

c 100 registered

AMBA accreditation

Strong alumni

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International

Henley South Africa

• “We build the people who build the businesses that build

Africa.”

• The only foreign business school in South Africa

• Over 1,000 students on site in January

• Mission to become

“Henley Africa”

• MBAid initiative

• 60% of Henley MBA

students registered in

ZA

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Henley International

• International Partner Network (IPN)

o Subsidiaries

• Finland, Germany, South Africa

o Partners

• Beijing Institute of Technology (BIT) – BSc Accounting

• Rotman (U of Toronto) – DBA

• Venice – BSc in Finance

• Ghana - MSc Informatics

• Denmark, Malta – MBA

• Closed/Terminated:

o Henley Hong Kong (after 35 years) and Trinidad

• University of Reading in Malaysia (Johor)

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• Ranked #1 for potential to network and breadth of alumni network

• Masterclasses, events, and special interest groups (LinkedIn: 7,500)

• Alumni associations in more than 15 countries

• Alumni provide mentoring, advice, support for recruitment and funding

• 60% of Alumni are in mid/senior positions

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The Henley Alumni Community

Administrative Staff College of India

• Based on Henley

• Founded 1953

• Hyderabad

• Still a key Civil Service

academy in India

• Describes itself as

o The only bar with a management college attached.

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Issues and Summary

Aligned identitiesShared ambitionsDifferent markets

Henley is an excellent business school anda significant asset of UoR

A trusted relationship

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Insert footer on Slide Master www.henley.ac.uk

Changing Markets

• European Regulation

o Trading size and speed

• Technology

• Scandals and Reputation

o LIBOR

• People

o Knowledge and the Levy

• Environment

o BREXIT

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Regulation

MiFID II

• Markets in Financial Instruments Directive 2

o In effect from 3 Jan 2018

• Fund managers must explicitly pay for research

separately from trading fees

o Arguably increases transparency by hurts smaller firms

• Much stricter “Best Execution” rules to reassure traders

that they have got a good price

o But volume of reporting is very large!

• Block Trading

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Block Trading

• How does a big institution trade a large block of shares

without obtaining a damaging price?

o Been a major regulatory question for decades

• London used to be the centre of institutional trading

with its “upstairs market” and trade reporting delays

• Arrival of electronic platforms made this untenable

o Either large trades are automatically cut up

o Or trade off-exchange in “dark pools”

• Dark Pools

o Dark Pools share was 2% in 2010 and 9% in 2016

o The LSE’s own dark pool is Turquoise-Plato executed £550m in

July 2016 and £1.75bn in Feb 2017

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Block Trades

• MiFID forces reporting even in dark-pools

o “Double cap” to prevent reliance on off-exchange (If more than

4% of trading in any stock on a dark-pool, or 8% across pools,

then trade off exchange is prohibited for 6 months

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95

83

76

73

57

49

45

0 20 40 60 80 100

FTSE 100

FTSE 250

OMX 530

ISEQ

MDAX

CAC 40

STOXX 50

% of trading above 8% on Dark-Pools

Block Trades

• Regulatory arbitrage already led to “innovation” EG

o “Periodic Auctions” in which orders are given at “indicative”

prices and are matched by volume and executed at “best” price

• Since the bid price IS public, this is not a dark pool (even

though executed price isn’t)

• Periodic may be “many times per second”

o “Indication of Interest” platform allows pre-trade matching but

execution is then public.

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Equity trade size shrinking

• In FTSE 100 stocks the average trade size

o in 2002 it was £60,000

o in 2012 it was £6,500

o In 2017 it is £4,750

• Consequence of High Frequency Trading (HFT) provision

of market liquidity versus traditional OTC dealer

provision

• AND difficulty of executing block trades

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High Frequency

• Traders realise that

o “cutting up” big trades gains value

o Very quick trading is itself profitable

o Trades now execute 1/100,000 seconds

• Trades executed direct to exchange

o Regulation cannot keep up

o “Flash Crash”

• Attempts to control it by trading limits

o Resisted by those seeking “fair” profits from exploiting

innovative technology

• 50% of US trading is High Speed

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Execution speed

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• How fast can I trade?

• Is it worth it?

o Cost of connection between Illinois-NewJersey is $2m/annum

7.6

7.8

8

8.2

8.4

8.6

8.8

2012 2013 2014 2015 2016

Round-Trip Latency (milliseconds)

Actual Theoretical Minimum

Why is this necessary

• Is this:

o Good Business

o Pointless

o A rip-off

o Damaging to the market

o A cause for regulatory concern

• Is it insider trading

o Who owns the order flow?

• Last year’s news – “the market has peaked and focus is

now on strategy not speed”

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Is this new

• Rothschild made their money with pigeons at Waterloo

• 2017 it is all in Basildon and Slough

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Technology

Examples

• Trader fined £37,000 for using WhatsApp at work

o DB has banned apps from work phones

o GS has capped private phone bills after people switched to own

phone use!

• Blockchain (core of bitcoin) being tried to settle oil

trading to avoid costs and delay of the traditional

contracts/letters of credit/inspection regime

• Quantopian – crowdsourced algorithmic trading hedge

fund

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On the other hand

• The London Metals Exchange is the largest market in

metals

o Still open outcry

o “unusual” rules

o Bums on seats

• New premises

in 2016

• Plenty of phone/online trading but ring price is key

• Established above a hat shop in Lombard Court in 1877.31

Stephen Ross

• Died 2017

• “Arbitrage Pricing”

o Basis for much financial

innovation

o Equity / hedge funds

o Option pricing

• ”If I can copy it, I can value it”

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LIBOR / Behaviour

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Corruption: Libor

• London Inter Bank Offer Rate

o Used as the “reference” interest rate for 100 years

o Set by “agreement”

• Was the market rigged?

• Settlements:

o ICAP $87m

o Barclays $450m

o RBS $615m

o Rabobank $1,000m

o UBS $1,500m

• So how much did they make from this?

o And for how long

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LIBOR

• Latest twist is allegation that Bank of England pressured

Barclays (and others) to rig LIBOR

• Fines to date £7.5bn

o Barclays fined £350m; Bob Diamond resigned; 4 traders

imprisoned

• ICE (which owns Liffe) also owns LIBOR

o Bought for £1 from BBA after scandal

o New measure based on actual trade information

• 4.5million data points per day

• Algorithm is based on trading which is based on algorithms!

• CEO “Need humans when the machine goes nuts”

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The Professionals

• Bob Diamond

• “One of the most thoughtful and

intelligent bankers”

• Resigned (again) after LIBOR scandal

• Rebuilding reputation:

“incredible entrepreneurial opportunity”

to invest in financial companies competing

with so-called systemically important banks

that are facing increasing scrutiny from regulators.”

• Now owns historic London stockbroker Panmure-Gordon

which is now very active on AIM.36

People

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Buyers of Financial Products

• FT Survey of 18-35 year olds

• 17% did not know their tax band

• 25% unsure whether they were in a pension scheme

• 38% think Lifetime ISA better than Pension

o In spite of better tax regime and employer contributions

o “Mis-selling risks written all over this” Ros Altman

• 56% did not know what compound interest is

• “Those Hargreaves Landsdown people will tell me what

to invest in, won’t they?”

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Professional Competence

• Been questioned for decades (not just financial services)

o GS cut training to $100 employee/annum

• Apprenticeship Levy – Truly Disruptive

o Mandatory “Use or lose” training budget as from 1 April 2017

o Levy set at 0.5% of Payroll – approx. £2.4bn by 2018

o Affects over 2,000 private and public sector entities

• Programmes at all levels in-work to employees

o To industry approved “standards”

• Estimates are for 2,000 standards and 3m participants

o By Registered Providers

• Already approved:

o Chartered Manager (levels 5, 6 & 7)

o To be approved: Accounting (level 7), Financial Services (level 6) 39

Environment

Brexit

• Changes everything

o Or not

• Individual positions are non-negotiable

o Discussion is difficult

• “We have had enough of experts”

o How many people actually know what “WTO rules” are?

• LSE / Deutsche Börse merger failed

o Very close to Article 50

o “Difficult to do cross-border business when there are strong

nationalistic undertones”

o Carsten Kengeter (CEO of DB) is under investigation for insider

trading related to deal

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Brexit

• Will Slough and Basildon save the UK?

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