Middle Office
What does middle office mean?
Middle office refers to the team that supports the customer facing teams with administrative tasks but it can also include compliance and risk management, however, this is less commonly used unless in financial institutions, such as an investment bank, brokerage firm, credit union, foreign exchange or insurance companies.
Roles of Middle Office Staff
Middle office functions are mostly to support the front office personnel, but there are also a number of other functions within their remit that helps to bridge the gap between front and back office jobs, including:
Risk Management
The middle office staff take on the role of risk management, such as market risk, credit risk, and operational risk. They monitor trading activities, implement risk mitigation strategies and ensure compliance with regulatory requirements and internal policies.
Valuation and Pricing
The middle office are responsible for valuing financial instruments and assessing their market value. This is done using pricing models, market data, and other relevant information that helps to determine accurate valuation, essential in financial services companies’ reporting, risk management, and regulatory compliance.
Performance Measurement and Attribution
Middle office personnel analyse the performance of investment banking portfolios and assess the contribution of various factors to investment returns. The middle office staff will track the performance metrics, conduct performance attribution analysis, and provide insights to portfolio managers and senior management to help improve their financial transactions and ensure a good return on investment.
Middle office and back office employees typically aren’t client facing, but they play a key role in the success of any corporate strategy.