Pennsylvania is home to America’s oldest stock exchange, the Philadelphia Stock Exchange (now the Nasdaq PHLX), which first opened in 1790. Back then, the state was best known for its industrial manufacturing, including steel, but today Pennsylvania is home to the headquarters of a number of companies across all industries.
Nandu NayarChairman of the Perella Finance Department at Lehigh’s College of Business, developed a project for his Master of Financial Engineering (MFE) program that could target innovation within the state while providing students with hands-on learning opportunities. “I thought, ‘Is there a way to quantify the state’s actual commercial activity?'” says Nayar.
Enter: The PA-100 index.
A group of more than a dozen MFE program students built from scratch the PA-100 Index – a stock index representing the 100 largest publicly traded companies headquartered in Pennsylvania by market capitalization. This is no small thing.
Ramos Wu ’21, a second-year MFE student, has been involved with the PA-100 Index since its inception. In addition to the logistics of the project (creating the soon-to-be-live website, aligning it with university standards, collecting data, building the index according to industry standards, and more), Wu guided his cohort to a tangible goal. “You can show potential employers that you’ve done real work, rather than just your classroom experience,” says Wu.
As Wu progressed through the MFE program, he turned over the leadership role for the PA-100 index to Wasti Khan ’22, who joined the program in August 2022.
Khan began working on the PA-100 Index while he was a Fellow at Lehigh’s Mountaintop Summer Experience after I heard about it MFE Program Manager Patrick Zoro.
“The summer was just about learning with the team what indexes are, how they’re made, and how we can make our own,” says Khan. For the actual development of the index, “we use open-source APIs, collect data on a daily basis, and then process it to calculate the market cap on a daily basis.” That’s in addition to the behind-the-scenes calculation of the index math, error checking, coding, and governance of a team, says Khan.
Nayar recognizes the benefits of students taking charge of something for themselves. “Learning flexibility, learning resilience, I think is the most important takeaway from these project learning experiences, and that’s something Patrick Zoro has tried to bring into the MFE program.” Nayar adds, “How do we bring students basically dealing with real-world complexities beyond the academic textbook version of a project? This is where these projects with an actual outcome can really enhance the learning experience for our students.”
“We will market the index to companies that are included in it, and we will be reaching out to various entities in Pennsylvania so they can use it as a vehicle to boost the state’s economy,” Zoro says of the index’s prospects. “We’ll aim for them too [Pennsylvania] Chamber of Commerce, Parliament and beyond. The potential is huge.”
As students eventually graduate from the MFE program, Zoro acknowledges that his future will take a new shape, saying, “New students will take the mantle to manage it, make it better, make it bigger.” to improve the marketing and reach of the index and maybe create other indices as well.”
This does not mean that the students are completely on their own. The corporate sponsor for the PA-100 index project is Lehigh alum Alex Matturri ’80, retired CEO of S&P Dow Jones Indices, board member of CBOE Global Markets and The Index Standard.
“Alex was an absolutely phenomenal resource because he was at the highest level in the industry,” says Khan.
Matturri recognizes how comprehensive the PA 100 Index project is. “They go beyond what many schools would have done, which was just designing an index. They are building the computing platform and working on the website, which is a much more involved project.”
The first such index, the Dow Jones Railroad Average (now called the Dow Jones Transportation Average), was published as a precursor in 1884 The Wall Street Journal to explain to the readers what is going on in the market. Today there is a huge indexing industry that serves a similar core purpose.
As for the PA-100 index, “It’s really related to Pennsylvania’s growth,” says Matturri. “There is a nice connection to the local economy.”
Lehigh’s Library and Technology Services Group provided assistance to make the technology tamper-proof, particularly Amanda Caton, LTS Associate Director.
Because of the multifaceted nature of the PA-100 Index project (math, data science, leadership, and the like), the experience offers students the opportunity to explore different pathways. Wu has accepted an offer to become an employee at a technology consulting firm. “I’m also preparing to learn different things and get different certifications to be a money manager in the future,” he says.
For Khan, the PA-100 Index project got him started on index construction. “It’s something I’m interested in and have experience in,” he says, noting that what started as an engineering school major has morphed into something rewarding for him.
The project will evolve with future MFE groups, including building automation, commercializing the index and more. “Hopefully,” says Matturri, “this is a living, breathing project that will continue into the future.”
Story of Rachel Curry