The back office obtains independent confirmation of each and every deal from the counter party and settles the deal only if it is within the exposure limits allowed for the counter party. Back office also verifies that the rates / prices mentioned in the deal slips are conforming to the market at the time the deal is entered into.
What is the back office of a bank?
The back office is namely referred to as ‘operations’. This includes all of the services and duties that must be carried out when trades are made by the front office: clearing and settlement. These are many administrative roles, which play a vital part in the overall functioning of the bank – and the world of trading overall, for that matter!
What are the requirements of back office trading?
Back Office should have an appropriate internal control system catering to stock exchange trading and settlement before commencing operations on the exchanges. The back office arrangement should be such that trading on the NDS/ OTC market and on the stock exchanges can be tracked easily for settlement, reconciliation and management reporting.
What is the role of the back office in trading?
It monitors each day’s receipts and payments of foreign funds and counter values and undertakes reconciliation of interbank transactions. Back office monitors receipt of exchange brokers’ notes for deals concluded through them which are checked with corresponding deal slips immediately on receipt.
What is the function of back office operations?
Back-office operations function to process transactions and control risk. They are also involved in the clearing and settling of trades as well as issuing new securities via initial public offerings (IPOs). Back-office personnel are critical to accounting-related tasks, such as auditing.
What is back office settlement?
What Is Back Office? The back office is the portion of a company made up of administration and support personnel who are not client-facing. Back-office functions include settlements, clearances, record maintenance, regulatory compliance, accounting, and IT services.
What is the role of back office in trade life cycle?
The Back Office primarily performs three important functions which are 1) Clearing, 2) Settlement and 3) Accounting. This stage deals with significant operational activities such as record keeping, order confirmations, trade settlement and regulatory reporting.
What are back office operations?
Back office operations means a business function that may include one or more of the following activities: customer service, information technology and data processing, human resources, accounting and related administrative functions.
What is the role of front middle and back office in trade life cycle?
How a Middle Office Works. A financial services company is logically broken up into three parts: The front office includes sales personnel and corporate finance, the middle office manages risk and IT resources, and the back office provides administrative, support, and payment services.
What is trade settlement process?
Following a trade of stocks, bonds, futures, or other financial assets, trade settlement is the process of moving securities into a buyer's account and cash into the seller's account. Stocks over here are usually settled in three days.
What Is back office interview questions?
9 most expected back office interview questions and answersTell me about yourself. ... What do you understand about back office tasks? ... Elaborate on your experience in back office environments. ... What do you know about our company? ... What kind of skills can you bring to this job?More items...•
What are the skills required to work in a back office?
Skills Required for Back Office WorkTaking initiative and measuring own performance.Master's or bachelor's degree in business administration or similar field.Hands-on experience as an Office Executive.Excellent organizational skills.Skills in managing computer operating systems and MS Office software.More items...•
Is back office job good?
Backend roles pay well - generally far better than general banking/ corp fin careers. In terms of career path, i would say almost all backend guys transcend to other roles - client facing, corporate finance treasury within 3–5 years.
What is another word for back office?
What is another word for back office?adminadministrationbehind the scenesnon-public facingoperationssupport
What is difference between front office and back office?
Front and back office are terms used to refer to various business processes within a company where revenue-driving and customer-facing activities are considered front office, and all the backend processes used to deliver quality products or services are considered part of the back (and middle) office.
What is middle office in trading?
The middle office serves as the translation layer between front office investment and back office accounting systems. This frees the front office from having to trade in a particular account structure dictated by their accounting system, while ensuring that the back office receives the data they require.
What are the reasons for failed settlement?
Settlements fail for three primary reasons: standing settlement instructions (SSIs) are inaccurate or incomplete; securities have been sold but the party does not have them for delivery – or want to deliver them -- for various reasons; or the trade is not known (DK'd) or matched by the counterparty.
What are the steps involved in a trade life cycle?
Trade life cycle has different stages, by which a trade flows through. These detail steps are from the point of order, receipt, execution through to settlement of the trade in a systematic manner.
Is a trader back office?
Front office roles exist to generate revenue for the bank and make as much profit as possible for their clients. Traders, brokers, asset managers, researchers, and sales and structuring professionals are the key players of the front office line up.
Which part of the trade life cycle does settlement is involved?
After a trade is executed, the transaction enters what is known as the settlement period. During settlement, the buyer must make payment for the securities they purchased while the seller must deliver the security that was acquired. Depending on the type of security, settlement dates will vary.
Which is the right order of steps of a trade life cycle order matching?
The Trade Life Cycle ExplainedStage one: the order. ... Stage two: front office action. ... Stage three: risk management. ... Stage four: off to the exchange. ... Stage five: match making. ... Stage six: trade made. ... Stage seven: confirmation. ... Stage eight: clearing begins.More items...
What does it mean to enroll in a course?
Enrolling in a course lets you earn progress by passing quizzes and exams.
What degree does Artem have?
Artem has a doctor of veterinary medicine degree.
What is back office staff?
Back-office personnel are critical to accounting-related tasks, such as auditing. They're the ones who maintain proper records as well. Just as importantly, if any regulatory or compliance issues come up with the financial authorities, expect the back-office staff to handle them.
What is back office operations?
Back-office operations are the portions of the company composed of non-client-facing functions and personnel. Very generally, this includes things like administration and human resources. Another example of this would be the IT department, regulatory compliance, or accounting.
What is the front office of a company?
The front office is a term that refers to a part of a company, and its respective personnel, that is client-facing.
What are the two parts of a company?
Portions of a Company. Traditionally, and in a very basic sense, there are two different parts to a company. There are the front-office and the back-office operations.
Where is back office located?
Back-office operations and personnel aren't confined to a dark and unseen portion of a building; however, many of today's global companies do something very similar with their back-office operations, meaning the back-office operation will sometimes be found somewhere other than at headquarters, in auxiliary offices. Or, back-office operation personnel may be outsourced to lower-cost countries, or the employees may even work from home.
What is the back office of a forex fund?
In the case of forex treasury deals, back office looks after foreign exchange settlement, and interbank confirmations. It maintains Nostro mirror ledgers, returns, merchant forward contracts, advance bills EEFC, reporting forms, receipt from branches regarding purchase and sale of foreign exchange transactions, FBP reversals, interbranch transactions, preparation of detailed reports on currency positions at end of the day, preparation and maintenance of fund’s chart, statement of maturity pattern of contracts, maturity-wise analysis of deals etc.
What is proper co-ordination between the back office and dealing room?
There should be proper co-ordination between the back office and dealing room. This revolves around proper monitoring of the day light limits, overnight limits, counterparty bank limits, country limits etc. Cases where these limits are exceeded should be studied, reasons for exceeding the limits should be ascertained from the dealers and should be reported to the Top Management without delay.
What is a register in a computer?
A register is maintained to keep an account of deal slips used, cancelled and keyed in the computers. Number of deals done should tally with number of slips used and the same is tallied with the number of deals keyed in the computer.
How does the back office verify the rates?
Back office also verifies that the rates / prices mentioned in the deal slips are conforming to the market at the time the deal is entered into . Such verification is done by scanning the Reuter screens and noting down the market rates at different points of time. The lending and borrowing rates are also similarly verified.
What is broker wise statement?
Statement giving broker-wise summary of deals put through during the month and brokerage payable to each broker are generated on computer/prepared manually at the end of each month.
Why should deal slips be serially numbered?
2. The Deal Slips should be serially numbered and controlled separately to ensure that each deal slip has been properly accounted for.
What are the Treasury functions?
Treasury functions viz., investment, funds management including inter-bank borrowings, bills rediscounting, etc. should be subjected to concurrent audit and the results of audit should be placed before the Chairman and Managing Director of the bank at prescribed intervals.
Back Office Operations Module: Exam Details
With over 200 plus test centers, NCFM offers online exams as well as self-study based exams that are conducted across India. These exams are available in the English language. Talking about the Back Office Operations Module, for this an Open Office Spreadsheet will be provided with allowance for all types of calculators during the test.
NCFM Backoffice Operations Module Course structure
NCFM provides a course outline for the Back Office Operations Module to help in understanding the concepts in a sequential manner. This include:
NCFM Procedures
NCFM has various procedures related to the exam. This is to help the individuals to understand the exam policies as well as the way of taking the exam. Some of them include:
What do researchers do?
Researchers will investigate potential markets and investment opportunities for clients to inform pitches and asset management, whilst the traders and brokers make the trades themselves. These bankers will also support clients as they buy, merge or sell or provide advice and services when it comes to financing and restructuring.
What is middle office in investment banking?
In investment banking, the middle office usually consists of risk management, research and compliance departments, as well as some elements of technology. Risk analysts and managers work closely with front office teams to feed them their results relating to various asset classes and financial markets. This information helps the decision makers ...
What is the back office of a bank?
The back office is namely referred to as ‘operations’. This includes all of the services and duties that must be carried out when trades are made by the front office: clearing and settlement. These are many administrative roles, which play a vital part in the overall functioning of the bank – and the world of trading overall, for that matter! There are also opportunities to work on projects, creating new processes and refining or automating older ones. They offer a chance to work with various different asset classes, and a global dynamic to work – global investment banks will coordinate their operations teams worldwide.
What are the divisions of an investment bank?
There are a number of divisions that make up an investment bank, usually divided into ‘front office, ‘middle office’ and ‘back office’.
What is financial control?
Financial control is also part of the middle office – it’s essentially the accounting department for the bank, preparing financial statements for reporting to industry regulators etc.
Why do multinational banks unite their operations teams across the globe?
Multinational investment banks often unite their operations teams across the globe to get tasks done and problems solved as quickly as possible. There are still essential deadlines to meet, though the heat of the working environment may not be as intense as in the front office.
Is a bank a business?
It’s not just about clearing and settlement services either. A bank is, after all, a business like any other, with staff to take care of, an image and brand to mould and promote, and a need to source the very best talent for their roles, from graduate intake up to the most senior roles. This is where HR and marketing comes in, running recruitment, ensuring standards are upheld across the business, handling disciplinary issues when necessary, organising benefits and rewards for existing employees and generally acting as the glue to keep everything in the bank together.
What is securities operations?
Securities Operations involves various middle office and back office operations of Securities Broking Firms. This tutorial would give you an understanding of the basics of the Indian securities market, the different products traded and the various market participants and the respective roles they play in the Indian securities market. It would also help you know the various functions of the Front Office, Middle Office and Back Office in a Securities Broking Firm, understand the trade life cycle, the steps and participants involved in the trade life cycle and the role of the back office in a securities broking firm as well as understand how the risks are managed in a securities broking firm, the clearing and settlement process.
What is a non convertible debenture?
Non Convertible Debentures (NCDs) are pure debt instruments without a feature of conversion. The NCDs are repayable on maturity. Partly Convertible debentures have features of convertible and non-convertible debentures. Thus, debentures can be pure debt or quasi-equity, as the case may be.
What is a debenture in India?
Debentures are instruments for raising long term debt. Debentures in India are typically secured by tangible assets. There are fully convertible, non-convertible and partly convertible debentures. . Fully convertible debentures will be converted into ordinary shares of the same company under specified terms and conditions. Partly convertible debentures (PCDs) will be partly converted into ordinary shares of the same company under specified terms and conditions. Thus it has features of both debenture as well as equity. Non Convertible Debentures (NCDs) are pure debt instruments without a feature of conversion. The NCDs are repayable on maturity. Partly Convertible debentures have features of convertible and non-convertible debentures. Thus, debentures can be pure debt or quasi-equity, as the case may be.
How many groups are there in the VaR margin?
All securities are classified into three groups for the purpose of VaR margin.
How does a buy order work?
In case a buy order is entered by the client/ on behalf of client , the broker’s system queries to find the available balance in the clients bank account and whether it is sufficient to meet the stipulated margin requirements. This is as per the agreed upon terms and conditions of risk management with the client. If the available balance satisfies the risk management parameters then the order is routed to the exchange. In cases where the balance is not sufficient the order gets rejected. A rejection message is shown in the system, which then is conveyed to client. In case there is no direct interface to a banking system, the client is asked to maintain cash and securities deposit in order to ensure adequacy of balance.
How to calculate mark to market?
Mark to market is calculated by marking each transaction in security to the closing price of the security at the end of trading. In case the security has not been traded on a particular day, the latest available closing price is considered as the closing price. In case the net outstanding position in any security is nil, the difference between the buy and sell values shall be is considered as crystallized loss for the purpose of calculating the mark to market margin payable.
What is equity segment?
The equity segment of the stock exchange allows trading in shares, debentures, warrants, mutual funds and exchange traded funds (ETFs).
What is SLIB middle office?
SLIB Middle Office meets the requirements of both sell-side and buy-side organizations that are seeking for successful post-trade solutions in order to increase the efficiency of their operational middle office. SLIB Middle Office automates all the process of allocation of the retail or institutional orders retail perfectly integrating the systems of......
What is a SaaS system?
Software as a Service (SaaS) Integrated Information System (S2i) In an increasingly demanding environment, information system performance has become an issue of key importance. Our platform stands out because of it reliability, scope continuous evolution, productivity efficiency, as well as the pooling of investments and leveraging of cost savings. Onboarding When a private bank chooses to delegate the management of its banking operating system to us, it benefits from a high level of security and support. Whatever your size and your requirements, you will join the S2i with full confidence. Business Process Outsourcing Our Business Process Outsourcing solution enables us to manage all of your back office processes. The teams operate across two operational centres, in Switzerland (Lausanne) and Singapore. Together, they comprise of approximately 200 dedicated banking experts. Digital products & services e-Banking and m-Banking Azqore offers innovative and intuitive user interfaces, carefully structured information and highly developed analytical functionalities. Azqore's e-Banking and m-Banking platforms enable your clients to view their assets and enter stock exchange and payment orders with complete security. These......
Why is Arbor Order Management System important?
As investment workflows grow more complex due to increasing type of asset classes and its alternatives, it’s becoming more important for investment offices to improve operational efficiency, automating administration duties related to the real work. This is why, we created Arbor Order Management System, a software that possesses the ability to streamline your investment......
What is Quantfactory?
QuantFACTORY suite of products offers a complete set of tools for quantitative trading strategies development and automation for financial institutions. Based on a .NET framework and utilizing Visual Studio, it allows your company to rationalize your trading strategies development cycle using an Integrated Development Environment (IDE) across the research-development-back testing-execution......
What is infront brokerage?
Infront provides a complete online brokerage solution for brokers who want to offer electronic trading services to their active private investor clients. Modern easy-to-deploy desktop, web and mobile apps, back office integration, order validation and web-based user administration tools help brokers efficiently leverage their existing infrastructure for increased order flow....
What is an orderroute?
OrderRoute is an integrated trade order routing engine that allows users, depending on their role privileges, to directly place the trade orders through transactions such as buy/sell/subscribe/redeem/switch directly from their client portal. OrderRoute leverages the Investrack™ platform capabilities to enable these trade orders to interface directly into the back-end order management......
What is Numerix Oneview Enterprise Platform?
Numerix Oneview Enterprise Platform is the next generation pricing, risk, analysis and trade management platform designed for the next evolution of the capital markets. Driven by innovations in dependency graph technologies, the Platform is the only real-time cross-asset platform putting the front office first, while driving analytic consistency across all business......
Why is it important to assess the potential impact of the risk?
It is very important to be able to assess the potential impact of the risk, as it will have to be weighed against the cost of future preventive or corrective measures. Cost-intensive measures to prevent low risk would not be rational.
What is risk control?
Secondly, risk control consists of limiting exposure a priori by defining limits beyond which it is no longer possible to take a position without the authorization of a risk manager. This method is particularly used for credit risk control. It aims to avoid risk taking beyond an acceptable limit.
What is the first step in assessing risk?
First, assess the risk, which includes assessing the potential loss generated by the realisation of the risk, and secondly (something even more difficult) estimating the probability of the risk occurring.
What is enterprise risk management?
Accordingly, enterprise risk management is not about seeking or avoiding risk. It is about optimizing risk.". Risk is any event that could prevent an organization from achieving its objectives or maximizing performance. There is no financial or economic activity in general, without risk-taking.
What is the efficiency of information systems?
On all levels, the efficiency of the information system is defined by its ability to process transactions automatically and in a secure manner: the byword is STP (Straight Through Processing): the transaction is processed straight through. In other words, the transaction is processed with little or no manual intervention.
What is the front office of a bank?
The front office is literally the bank's interface with the market. The front office coordinates and handles all the needs of the bank and its clients with respect to hedging and financing.
What is market risk?
Market risk: exposure of a portfolio to market fluctuations. Exposure to market risk exists when the bank has taken a short or long, buying or selling position on a given financial instrument.
What is collateral management?
Collateral management is the process of ensuring that margins are paid and collected. A failure to collect adequate collateral from clients will increase the risk that a derivatives operation will suffer from counterparty default.
What is position valuation?
Position valuation. Valuation involves establishing the correct current value of trades and of trading books. The key principle here is that valuation should be verified by staff who are separate from the sales and trading function, to ensure an independent check.
What is a Nostro reconciliation?
Reconciliations. A Nostro account is a bank’s account with another bank. Nostro reconciliation is designed to ensure both that a trade has settled properly and that the correct payments have been made as expected.
How The Back Office Works
- The back office can be thought of as the part of a company responsible for providing all business functions related to its operations. Despite their seemingly invisible presence, back-office personnel provide essential functions to the business. The back office is an essential part of an…
Example of Back-Office
- Today, most back-office positions are located away from the company headquarters. Many are located in cities where commercial leasesare inexpensive, labor costs are low, and an adequate labor pool is available. Alternatively, many companies have chosen to outsource and/or offshore back-office roles to further reduce costs. Technology has afforded many companies the opportu…
Special Considerations
- Although back-office staff members do not interact with customers, they tend to actively interact with front-office staff. For example, a manufacturing equipment salesperson may enlist the help of back-office staff to provide accurate information on inventory and pricing structures. Real estate marketing professionals frequently interact with sales agents to create attractive and rele…