25865 Digital and Decentralised Markets

Warning: The information on this page is indicative. The subject outline for a particular session, location and mode of offering is the authoritative source of all information about the subject for that offering. Required texts, recommended texts and references in particular are likely to change. Students will be provided with a subject outline once they enrol in the subject.

Subject handbook information prior to 2025 is available in the Archives.

UTS: Business
Credit points: 6 cp

Subject level:

Postgraduate

Result type: Grade and marks

Requisite(s): 24 credit points of completed study in spk(s): C04048 Master of Finance OR 24 credit points of completed study in spk(s): C04258 Master of Finance (Extension) OR 24 credit points of completed study in spk(s): C07021 Graduate Diploma Finance OR 24 credit points of completed study in 24Credit Points spk(s): MAJ08984 c 36cp Finance Major MBA
The lower case 'c' after the subject code indicates that the subject is a corequisite. See definitions for details.
These requisites may not apply to students in certain courses.
There are course requisites for this subject. See access conditions.

Description

In this subject, students learn about financial markets and how they are being transformed by recent technologies, including automation, blockchains, distributed ledgers, and smart contracts. It starts with the fundamentals: how markets are designed, their roles, how they operate, and how financial markets affect companies and investment portfolios. It provides tools to evaluate market quality. The subject then covers recent innovations and contemporary issues in traditional financial markets, including fragmentation of trading across competing venues, algorithmic and high-frequency trading, dark pools, recent regulations, and market design innovations. The subject explores the rapidly evolving Decentralised Finance (DeFi) and Financial Technology (FinTech) ecosystems that are reshaping financial markets and the financial services industry. It covers the underlying technologies (blockchain, smart contracts, tokenisation), the applications (Decentralised Exchanges (DEX), Automated Market Makers (AMM), tokenised securities, non-fungible tokens (NFT), peer-to-peer lending/borrowing, insurance, and derivatives), and finally the challenges, risks, and areas for future R&D.

Subject learning objectives (SLOs)

Upon successful completion of this subject students should be able to:

1.	Apply an understanding of different financial market architectures and design features
2.	Explain the key roles of financial markets, and their interactions with asset pricing and companies
3.	Critically evaluate technology-driven innovations in financial markets
4.	Evaluate and assess financial market quality using empirical techniques

Contribution to the development of graduate attributes

This subject contributes to the degree by exposing students to the core principles of financial markets. Financial markets play an important role in the economy, and the subject explains how financial markets fulfil that role. Students develop teamwork skills through collaborative in-class activities and group work. They also develop oral and written communication competencies via their individual and group assignments.

This subject contributes to the development of the following graduate attribute(s):

Intellectual rigor and innovative problem solving
Communication and collaboration
Professional and technical competence

Teaching and learning strategies

Students will have pre-readings to complete before in-class workshops and discussions, including a mix of chapters, journal articles, and industry reports. Additional (optional) extension materials will be provided in the form of recorded videos and further readings to allow students to delve deeper into topics of particular interest. During the interactive, hybrid-mode classes, students will work in small groups on empirical exercises and DeFi application case studies to encourage cohort building and peer learning. They will also have the opportunity to present their research proposals to obtain instant feedback and promote the exchange of ideas.

Content (topics)

Roles of markets
Market architectures (limit order books, dealer markets, decentralised markets, auctions)
Market microstructure theory, adverse selection, and learning from order flow
Financial markets, asset pricing, and corporate finance
Market liquidity
Price discovery
Innovations in traditional financial markets (fragmentation, algorithmic trading, and dark pools)
DeFi infrastructure (blockchain, smart contracts, tokenization, and oracles)
DeFi/FinTech applications (automated market makers, tokenised securities, non-fungible tokens, peer-to-peer lending/borrowing, insurance, and derivatives)
Challenges and future research areas

Assessment

Assessment task 1: Research Proposal (Individual)*

Objective(s):	This addresses subject learning objective(s): 1 and 3
Weight:	35%
Length:	Each student will deliver their findings in two forms – an oral presentation in front of the class and a written report. Students will have 10 minutes of presentation and 5 minutes of Q&A. The presentation should educate the class about the proposed market mechanism and cover the points listed above. The written report can be up to 5 pages (1.5 spacing, font size 11).
Criteria:	Originality of the research topic Significance of the identified research gap & justification for research focus Logic of hypothesis & feasibility of approach to testing it Evaluation of available data & its application in proposed research project Clarity of presentation *Note: Late submission of the assessment task will not be marked and awarded a mark of zero.

Assessment task 2: Market Evaluation (Individual)

Objective(s):	This addresses subject learning objective(s): 1 and 4
Weight:	35%
Length:	A written report of up to 8 pages (1.5 spacing, font size 11). Students must also submit their data and (if relevant) code.
Criteria:	Appropriate choices of empirical methods Accuracy of the application and interpretation of the empirical methods and results Critical evaluation of market architectures

Assessment task 3: Case Study (Group)*

Objective(s):	This addresses subject learning objective(s): 1, 2 and 3
Weight:	30%
Length:	Each student will deliver their findings in two forms – an oral presentation in front of the class and a written report. Students will have 10 minutes of presentation and 5 minutes of Q&A. The presentation should educate the class about the innovation and cover the points listed above. The written report can be up to 5 pages (1.5 spacing, font size 11).
Criteria:	Quality of analysis of the Fintech/DeFi application Ability to relate the application to the broader financial system Critical evaluation of the application’s novelty, strengths, and weaknesses *Note: Late submission of the assessment task will not be marked and awarded a mark of zero.

Minimum requirements

Students must achieve at least 50% of the subject’s total marks.

Required texts

See Program