When we think of professions coming from market finance training, we immediately think, “become a Trader” or “become a Quant”. In effect, these occupations linked to the sale of financial products in banks or financial organisms constitute the heart of market finance. These trades make up the ‘front office’ of the business: Traders, Sales Traders, Quants and Structurers. However, a balance between these different professions working in tandem to generate profit is conditioned by an efficient administration and effective communication. It is here where the Back Office and the Middle Office intervene.
The Back Office can be defined as the service that combines support, control and administration. It provides a way to control, verify and ensure communication between different professions in the Front Office. If the Front Office is in direct contact with the activity of markets and investors, the Back Office calls for standardized procedures and lowering costs. The work performed by the Back Office is far from negligible, and that’s why recruitment for Back Office employees is highly selective in major banks. The Back Office is principally in charge of verifying operations, sending confirmations, accounting, and performing administrative reports.
Major investment banks and brokering services have recently created a Middle Office, which establishes a link between the Front Office and the Back Office. Middles offices’ tasks are much less administrative in nature than in the Back Office, and they are principally in charge of risk control. The Middle Office facilitates customer service by playing an intermediary role between offices. Having a Middle Office is not yet legally required, but most large banking groups use one and push for the creation of training programs for these new positions. The work of a Middle Office is essentially directed towards risk control: verifying the conformity of negotiations of the Front Office, curbing overspending, sending confirmations and closing negotiations.