École Polytechnique launches a research chair with Capital Fund Management (CFM)

18 February 2019

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Press release - 18 February 2019

Eric Labaye, President of École Polytechnique, Jean-Philippe Bouchaud, Chairman and Head of Research of CFM, Jean-Bernard Lartigue, Executive Director of the École Polytechnique Foundation and Jean-Michel Beacco, Chairman of the Executive Board of the Institut Louis Bachelier “Fondation du Risque” (FDR), sign off, today, Monday, February 18, 2019, on the creation of an Econophysics & Complex Systems Chair, sponsored by Capital Fund Management SA (“CFM”), the quantitative investment management firm.

The new Chair, to which CFM will contribute around €2.5m over ten years, will involve applying scientific techniques to further understanding of fundamental problems in financial markets, including market crashes, risk models and impact costs. In addition, by taking a different approach to economic modelling, the Chair will challenge the academic orthodoxy, which underpins policymakers’ approach to managing economies. With the support of the École Polytechnique Foundation as well as the Institut Louis Bachelier “Fondation du Risque” (FDR), it will be led by Michael Benzaquen (Head of the Chair, Researcher at the Hydrodynamics Laboratory of École Polytechnique (LadHyX, CNRS/École Polytechnique) and Professor in the Department of Economics of École Polytechnique, supported by Jean-Philippe Bouchaud (Chairman & Head of Research at CFM).

This Chair is the latest example of CFM’s commitment to furthering understanding of global financial markets and economics for the benefit of investors and policymakers. CFM has extensive academic heritage and close links with several leading academic institutions, including École Polytechnique, Imperial College London and Ecole Normale Supérieure.

The team will consist of members from both École Polytechnique and CFM. Ph.D. students and postdoctoral researchers (from École Polytechnique) supervised by Michael Benzaquen will work alongside researchers at CFM combining the best of academia and business. Specific areas of focus will be on the mechanics of market impact and the triggers of market instability. In particular, the Chair will seek to explore the concept that market crashes are a result of inherent flaws in market construction as opposed to current academic theory, which places greater weight on external factors. In addition, considerable focus will be placed on discrediting the idea that an economy is always moving towards a predetermined equilibrium. Different thinking in this field has profound implications on Central Banks and monetary policy.

Jean-Philippe Bouchaud, Chairman and Head of Research at CFM said, “We are delighted to be partnering with École Polytechnique, a prestigious French institute with strong academic credentials. At CFM, we are committed to furthering the understanding of financial markets and economics for the benefit of investors and policymakers. This Chair, which further strengthens our longstanding relationship with École Polytechnique, is seeking to push the frontier of understanding around some of the most fundamental questions facing market participants. Despite their obvious flaws, many participants remain wedded to traditional theories and approaches to explaining markets and economics. We hope our work and findings encourages the adoption of new ways of thinking in these important areas”.

Further information:

ABOUT ÉCOLE POLYTECHNIQUE / École Polytechnique, also known as L’X, is the leading French institution combining top-level research, academics, and innovation at the cutting-edge of science and technology. Its various undergraduate and graduate-level programs – Bachelor of Science, Ingénieur Polytechnicien (Master’s level program), Master’s, and PhD – are highly selective and promote a culture of excellence with a strong emphasis on science, anchored in humanist traditions. As a widely internationalized university, École Polytechnique offers a variety of international programs and attracts a growing number of foreign students and researchers from around the globe (currently 36% of students and 39% of faculty members).
École Polytechnique offers an exceptional education to prepare bright men and women to excel in top-level key positions and lead complex and innovative projects which meet the challenges of 21st century society, all while maintaining a keen sense of their civil and social responsibilities. With its 23 laboratories, 22 of which are joint research units with the French National Center for Scientific Research (CNRS), the École Polytechnique Research Center explores the frontiers of interdisciplinary knowledge to provide major contributions to science, technology, and society. École Polytechnique is also a pioneer and leading institution of the major scientific and economic cluster, Paris-Saclay, bringing together top French higher education and research institutions, as well as R&D centers of prominent international companies.
www.polytechnique.edu
ABOUT THE ÉCOLE POLYTECHNIQUE FOUNDATION / Created in 1987 by twenty leading French companies at the request of Bernard Esambert (Class of 1954), the Chairman of École Polytechnique Board of Directors at the time, and with the support of the Alumni Association, the École Polytechnique Foundation builds bridges between the business world and École Polytechnique, including its students and research professors. The Foundation is a recognized public-benefit organization that works to promote École Polytechnique. This status entitles it to receive gifts and bequests from both individuals and companies. The funds raised are directed to École Polytechnique programs, facilities, students, and research professors.
www.fondationx.org
ABOUT THE “FONDATION DU RISQUE” (FDR) / The “Fondation du Risque“ (FDR)was created in 2007 by four academic institutions (the Centre Economique des Actuaires, l’École Polytechnique, l’ENSAE and l’Université Paris-Dauphine) and four financial institutions (Allianz (ex AGF), Axa, Groupama and Société Générale). The foundation enables longer research projects that in a sustainable way supports the development of excellent French research in all areas connected to risk.
www.institutlouisbachelier.org/les-fondations/fondation-du-risque/