Introduction

Financial Technology: Methods and Practice

Lorenzo Naranjo

Spring 2026

About Me

• Education
  • BS and MS in Engineering from PUC Chile
  • PhD in Finance from NYU Stern
• Research Interests
  • Asset Pricing, Commodities, Corporate Restructuring, Derivatives, Fixed-Income
• At WashU
  • I teach derivatives, investments and quantitative finance courses.
  • I am the Academic Director of the MS in Quantitative Finance and MS in FinTech
• Before joining WashU, I taught at ESSEC Business School in Paris and University of Miami.

Teaching

• Undergraduate
  • Financial Technology: Methods and Practice (FIN 4506)
  • Investments (FIN 4410)
  • Options, Futures and Derivative Securities (FIN 4510)
• Graduate
  • CFAR Practicum (FIN 5019)
  • Data Analysis for Investments (FIN 5321)
  • Derivative Securities (FIN 5241)
  • Financial Technology: Methods and Practice (FIN 5506)
  • Fixed-Income (FIN 5250)
  • Investment Theory (FIN 5320)
  • Options and Futures (FIN 5240)
  • Quantitative Finance Projects (FIN 5560)
  • Stochastic Foundations for Finance (FIN 5380)
  • Topics in Quantitative Finance (FIN 5018)
• Online Graduate
  • Data Analysis for Investments (FIN 6533) and Options and Futures (FIN 6524)

Teaching Philosophy

• Your success is important to us!
• Applied course
• Emphasis on practice
• Goal
  • Learn important trends in Financial Technology
  • Acquire tools in machine learning and artificial intelligence
• Approach
  • Practice
  • Intuition

Nutshell

• The course is focused on the interplay between finance, business and technology
• Finance allows:
  • People to save and borrow to smooth consumption
  • Firms to raise funds to engage in productive activities
  • Governments to finance public activities
• Finance also helps agents and firms managing risks
• Trading is a friction at the core of the financial system
  • Technology can help!

Examples

• Bank wire transfers
• Credit cards
• Stock price quotation
• Interbank payment systems
• Electronic stock and futures trading
• Online brokers and banking
• Crypto currencies and blockchain
• Mobile banking
• Credit scoring

Small Case Study: Electronic Trading

• Stocks and futures use to trade physically
  • Stock exchanges: trading floors
  • Futures exchanges: trading pits
• Today all trading in exchanges is electronic
  • Futures exchanges in the U.S. were the first to implement this
  • Before electronic stock exchanges in the U.S. there were Electronic Communication Networks (ECN)

📈 Equities-Focused Exchanges

• These primarily list and trade stocks (equities) and many also handle ETFs and other listed securities:
  • NYSE – New York Stock Exchange — Core equities marketplace (largest U.S. exchange).
  • Nasdaq Stock Market — Major electronic equities exchange.
  • NYSE Arca — Trades equities & ETPs (also supports options on the Arca options market).
  • NYSE American — Equities exchange (small/mid-cap; also hosts an options market).
  • NYSE National — Equities trading venue.
  • Cboe BZX Exchange — U.S. equities trading platform.
  • Cboe BYX Exchange — Equities focus.
  • Cboe EDGA Exchange — Equities platform.
  • Cboe EDGX Exchange — Equities trading.
  • Investors Exchange (IEX) — Focused on equities trading.
  • MEMX, LLC — Equities exchange (and now has a connected options market).

📊 Options-Focused Exchanges

• These specialize in listed options (contracts giving rights to buy/sell underlying assets):
  • Cboe Options Exchange (Cboe) — The largest U.S. options marketplace.
  • Nasdaq Options Exchanges (multiple) — Nasdaq owns/operates several options venues.
  • Nasdaq operates a suite of six separate options trading platforms covering U.S. options markets.
  • BOX Options Exchange (BOX) — Equity options exchange.
  • MIAX Options Exchanges
  • MIAX Options
  • MIAX Pearl
  • MIAX Emerald
  • MIAX Sapphire (newer/expanding)
  • NYSE American Options — NYSE’s listed options market.
  • NYSE Arca Options — Another NYSE-owned options venue.
  • MEMX Options — MEMX’s new options trading platform.
  • Nasdaq PHLX (Philadelphia Stock Exchange) — Focused on equity & index options.

🧩 Dual-Role or Mixed Focus

• Some exchanges support both equities and options, often via separate market segments:
  • NYSE Arca – trades stocks/ETPs and also offers options on Arca Options.
  • NYSE American – equities + NYSE American Options.
  • MEMX – started as equities but now offers MEMX Options.
  • Nasdaq – primary equities venue but owns multiple options platforms.

📊 Major U.S. Futures Exchanges

• These are the primary active exchanges where futures contracts on commodities, financial instruments, interest rates, currencies, stock indexes, and other assets are listed and traded:
  • Chicago Mercantile Exchange (CME) / CME Group
    • The largest U.S. and global derivatives marketplace.
    • Offers futures on equity indexes (e.g., S&P 500, Nasdaq), interest rates, FX, agricultural products, and more.
  • Chicago Board of Trade (CBOT)
    • One of the oldest futures exchanges (est. 1848).
    • Now part of CME Group; trades agricultural, financial, and Treasury futures.

📊 Major U.S. Futures Exchanges (continued)

• New York Mercantile Exchange (NYMEX)
  • Part of CME Group; specializes in energy and metals futures (e.g., crude oil, natural gas, gold).
• Commodity Exchange, Inc. (COMEX)
  • Subsidiary of NYMEX/CME; focused on metals futures (e.g., gold, silver, copper).
• Cboe Futures Exchange (CFE®)
  • Operated by Cboe Global Markets; offers futures including volatility and other innovative derivative products.
• ICE Futures U.S., Inc. (ICE US)
  • Part of Intercontinental Exchange (ICE); lists futures on currencies, interest rates, and other products.
• North American Derivatives Exchange (NADEX / Crypto.com DCM)
  • A CFTC-designated contract market that offers margined and (recently expanded) futures trading.

New Competition: Coinbase

• Traditional futures exchanges (like CME Group, ICE, etc.) have operated within long-established trading hours, product sets, and clearing systems. Coinbase is pushing boundaries in:
  • Accessibility: 24/7 trading and perpetual contracts under regulation.
  • Integration: Futures linked with broader trading services in one platform.
  • Market structure: Influencing conversations about how futures markets might evolve in response to digital-native demand.
  • Competition: Drawing institutional crypto derivatives volume back into U.S. regulated venues versus offshore platforms.

Evolution of Volume of Perpetual Futures