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In its continued attempt to help students interface with the industry stalwarts, JBIMS hosted on campus Jitendra Marchino of JP Morgan for a Session on Derivatives on March 10th, 2008. Mr. Marchino is the Vice President, Future & Options Division at JP Morgan.
He is also an alumnus of the institute.
Mr. Marchino struck a chord with the batch immediately with his humorous way of presenting relevant examples to the batch. At the very outset, he chose to divide the class into Teams of 5, and involved them in small games, and the conclusions of each of them were related to relevant concepts in Derivatives.
He started off by stressing on the fact how each one of us is a part of and is intricately involved with the stock market, irrespective of whether we directly invest in stocks or not. He also explained the significance of the stock market movement on the different functionalities of an organization, which the MBA students may end taking up in the future.
He explained that the choice of an investment depends on more than one factor and varies from person to person. While the market perception may be the criteria for some, others might decide on the basis of their tenure of investment and expected returns during the period. To add to this, what also comes into play is the risk taking ability of each individual.
He went on to explain the concept of derivatives, but only after an exercise in which the teams were asked to bid at present for IPL squads based on their perception of the future profitability of each of the squads. The example more than clarified the meaning of an underlying, which is the foundation on which all Derivatives instruments are built.
Not budging from his interactive and fun-filled way of teaching, he went on to play another small game with the students, aimed at teaching them how these derivative instruments helped hedge risks. He then supplemented his explanations with real life examples of ways in which companies' structure their derivative instruments to hedge risks posed by internal environment and external market conditions in their operations.
After managing to help the students find their comfort zone through his unique style of keeping them involved at all times, he then went on to explain through various examples, how the market changes in one sector directly or indirectly impact the other sectors. This is what, he said, is the chief role of people who manage such derivative instruments. They keep a close watch on various sectors and try to project the impact of small and big changes / predictions / research on the other sectors of the economy.
The session was a highly interactive one and at the same time, of immense learning value to the budding finance managers present in large numbers. He concluded by suggesting them various ways in which they could groom themselves to tackle their jobs in the future. Mere reading is not enough, he said. It is how we apply what we have read, that is important to make a difference.
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