Creating our financial futures

The City of London is fast becoming the world’s most important financial district and the active engagement of a leading company like Man in supporting basic research in the universities is a very significant development from a national perspective’, says Neil Shephard, Professor of Economics and Research Director of the Oxford-Man Institute. ‘This generous donation provides Oxford with its first permanently endowed professorship in the area of finance and enables us to provide facilities for about ten staff based here, twelve research students and a further ten senior University researchers who will spend part of their time here.'

’Quantitative Finance is the application of quantitative methodologies and theory to the professional management of risk in financial markets. ‘The development of our understanding of risk has been an enormous intellectual journey over the last two to three hundred years’, says Professor Shephard. ‘The Oxford-Man Institute is bringing together a number of the best quantitative researchers in the University, from the Departments of Economics, Engineering Science and Statistics, the Mathematical Institute, the Computing Laboratory and the Saïd Business School, to tackle many exciting questions about how to measure and allocate risk in a market economy.’

The Institute will have a particular focus on alternative investments – investments that do not rely on the simple appreciation of equities and bonds. As well as hedge funds and Funds of funds, these include areas like energy markets, carbon trading and derivatives on weather.

The Man Research Laboratory, an extension of Man’s London based research team, will initially house three full-time researchers; this is expected to grow to eight over the next three to four years. ‘We believe that any activity that Man can pursue within the area of alternative investments to encourage the creation of cutting-edge research, the expansion of excellent teaching and research, and the development of leading academics in this field ultimately will prove useful to ourselves and our industry’, says Dr Tim Hoggard, Director of the Man Research Laboratory. ‘The co-location of our Laboratory and the Institute is mutually beneficial, providing the Institute with direct access to our practitioners, while at the same time giving Man the opportunity to engage in regular one-to-one discussions and knowledge-transfer with the leading researchers and students. There is more to be gained by having several meetings a week over coffee than by simply meeting up at the odd conference throughout the year.’

Although the two partners will be sharing premises, they are constitutionally and financially separate. Academic independence is a key feature of the Institute and standard University procedures for the management of intellectual property will be followed, with Man having first right of refusal to negotiate for Institute-developed IP, but Oxford not being obliged to accept Man’s offer.

‘Quantitative finance is a vibrant established academic discipline which is yielding dramatic insights into new forms of risk assessment and new ways of generating profits, as well as opening up many new mathematical concepts’, says Professor Shephard. ‘We have very high aims to become the world’s leading institute in this area, with outstanding research and teaching and a key role in developing the next generation of leading academics and practitioners.’