Back Office Structure and functions April 2006. 2 Table of Contents Back office structure and functions (Benoit Schaus) Sourcing (André Vandencamp) Outsourcing.

Slides:



Advertisements
Similar presentations
Dubai Financial Market
Advertisements

Caribbean Exchanges Network (CXN) Framework and Infrastructure Presented By: Marlon Yarde December 5, 2013.
SeMa – in the spotlight SeMa Settlement Management system.
INVESTOR ACCOUNT SERVICE IN CCASS
Page 1 Why do we need this process? To save the “spread” cost of purchasing Foreign Exchange from external banks GL accounting for both the FX deals happens.
Internal Controls Becoming Compliant. Design & Implementation of Internal Controls. Design: Need to show that a framework is in place to establish internal.
FX Prime Brokerage: Risks and Challenges
Cross Border Settlement Presented by: Mrs. Beulah Johnson Equity Operations Manager.
This Area Will Not Be Seen Alliance Lite Alliance Lite.
Costache Roman Country Manager Romania & Moldova
1 Payables Efficiency Through… Access Online PAYMENT PLUS.
Straight Through Processing (STP) Development Concept & Roadmap Indonesian Central Securities Depository (KSEI) Indonesian Central Counterparty (KPEI)
Omgeo’s Role in the US and Global Settlement Landscapes Marianne Brown, Omgeo 8 October, 2007.
Refunds More Hassle Than They’re Worth Utility Payment Conference.
Money Transfer Lecture Objectives : To define money transfer
Chapter 14 - Raising Capital in the Financial Markets.
PJSC CB PRIVATBANK Karina Demchenko IE-10a Alfred Nobel University Dnipropetrovs’k, Ukraine.
National Depository for Securities (KDPW)
International Business 9e
1 How Securities Are Traded Chapter 5 Jones, Investments: Analysis and Management.
Chapter 3 Accounting for Current Accounts Department
Michal Bodlák. Definition  An investment bank is a financial institution that assists: individuals, corporations and governments companies involved in.
MidQORT Automated middle-office. Principal Functions 1 ̶ Online evaluation and monitoring of positions ̶ Risk-management by customers ̶ Own position risk-management.
1 Financial System in Cambodia Mr. LIM CHHAYADA Deputy Head Division October 2010.
1 Cash Management in the Baltic States Agenda Overview on CM market in the Baltics Possibilities to manage Liquidity CM Solutions Treasury Solutions.
Ch Rising Capital in The Financial Markets  2002, Prentice Hall, Inc.
Global Treasury Services Latin America Operating Risk.
STP in Financial Supply Chain: Emerging Standards, Technologies & Practices IBA & FINSIGHT Payments Summit 2009 Ravishankar Group EVP & Country Head Cash.
CONDUCT A NIGHT AUDIT D1.HFO.CL2.06
University of Palestine International Business And Finance Management Accounting For Financial Firms Part (3) Ibrahim Sammour.
Transaction Processing System  Business Transactions are certain events that occur routinely in a business firm.  A transaction is a set of activities.
Foreign Exchange Market. Chapter Outline Function and Structure of the FOREX Market The Spot Market The Forward Market.
LINK 10 November 16 – 18, PS Deal Module Utilization v9.0 Case Study - AEP Rick Gray
1 ETF EXECUTION SERVICE OFFERING National Bank Correspondent Network Christine Rodrigues, Senior Vice President, Business Development and Relationship.
STP In Korean Securities Market VISION 2015 We bridge Asia and the rest of the world as Global Partner with internationally compatible investment services.
$$$. Bank’s income portfolio Fee Based Income - Also called Interest Income A A Accepting Deposits and Lending Loans at Different Interest Rates B B Deposit.
GROUP MEMBERS SIDRA ALEEM AILIA BATOOL GHAZI REHMAN ZAID HASSAN.
Foreign Exchange Market. 2 Foreign Exchange Markets The market where the commodity traded is Currencies. The market where the commodity traded is Currencies.
Slide 1 Accord™ SWIFT’s Solution for Trade Confirmation Matching September 2008.
Treasury Management at the Global Fund: perspectives.
Best Practices FX Business. Pre-trade preparation and documentation.
0 Glencoe Accounting Unit 2 Chapter 11 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Protecting Cash In any business, cash is used.
Internal Audit for Treasury Market Risk Management.
© 2012 Pearson Education, Inc. All rights reserved.2-1 Exhibit 2.1 The Structure of the Foreign Exchange Market Most important cities: London New York.
Settlement MODEL Presented by Mrs Kaouther RAACH.
FINANCE MODULE. The various subsystems Financial Accounting Investment management Controlling Treasury Enterprise controlling.
SABRE VIRTUAL PAYMENTS Karen Frayer Sabre Virtual Payments Manager.
What are the methods of money transfer available in Hong Kong ? Methods of domestic money transfer in Hong Kong  Cheque  Debit cards and Electronic Fund.
Guy Hargreaves ACF-104 Wechat: Guyhargreaves. Recap of yesterday Understand the tools used to manage the various balance sheet risks Understand the credit.
Payment processing re-invented Mark Bradbury, CEO.
Electronic Treasury and Treasury Single Account. Moldova’s Model Alexandr Prohnitchi Deputy Director of the Treasury of the Republic of Moldova.
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
Managing Operational Risk with STP Securities Operations Forum February, 2008 Sheldon E. Warrick.
By: Shashank Makode.  Investment is nothing but saving money in a way that will get you returns for it in the future (short-term or long-term)  Need.
Unit 6 – Chapter 5.  Describe the Sarbanes-Oxley Act of 2002 and its impact on internal controls and financial reporting.
March 2006 IT For Financial Services Joe Leinhauser TREASURY & SECURITIES SERVICES.
Current Trends in Foreign Exchange Randy Royther Head of Commercial Products 5/23/2016.
Categorizing of Fidelity business 1) SUPPORTING APPLICATIONS 2) TRANSFER AGENT APPLICATIONS 3) TRADING APPLICATIONS 4) ASSET MANAGEMENT APPLICATIONS 5)
Ministry of Finance of the Republic of Moldova of June 2016.
Prepared by: Session ID: Improve Banking operational efficiency by Implementing Financial Gateway and Cash Management Name Khalid Mohammed / Dan Kanner.
PEMPAL TCOP (The World Bank)
ETP – Settlement Model December 2016.
TREASURY ORGANIZATION AND STRUCTURE
TREASURY ORGANIZATION AND STRUCTURE
Trade Life Cycle Management in FinPricing: Part 2
Trade Life Cycle Management in FinPricing: Part 3
Trade Life Cycle Management in FinPricing: Part 1
Mutual Funds’ Order Routing Platform
Role of the Treasury in the Financial System of Uzbekistan
Presentation transcript:

Back Office Structure and functions April 2006

2 Table of Contents Back office structure and functions (Benoit Schaus) Sourcing (André Vandencamp) Outsourcing (François Dorland)

3 Table of Contents Back office structure and functions  Overview of a financial institution landscape  Why a back office ?  A central department  Some back office issues to conclude

4 Illustration : Purchase / Sale of security A complex operations series Middle Office External Bankers & Clients instructions Front Office Check completeness of instruction (cash availability) in the banking system Input instruction in the banking system Transmit instructions Checks client details: cash availability, signatures in the banking system Treasury  Validate the orders in the banking system Back Office Print the ticket from the banking system Generate the counterparty ‘s deal in the banking system File the instruction  Book the deal with the counterparty Input deal’s details in the banking system Complete the ticket and transmit it  Check client and bank deals in the banking system with ticket  Execute the deals in the banking system Generate, validate and send the swift messages File the ticket with swift messages and broker confirmation   Overview

5 Illustration: a standard IT Architecture for a private bank in Luxembourg A complex technical environment Client information Instruction Electronic S Report Commercial action Credit proposal Know Your Customer Banking System  MM rates & security prices FX rates & security prices Reporting interne Bankers Alert DB_STAGING OLYFPRO Fund Order Management (FOM) Swift Alliance Recon Clearstream (Create & Connect) Semi- automatic Automatic In-house application phase 2 In-house application phase 1 External application shared with Bankers  Other  Overview

6 How is a trade processed in an institution ? (1/2) Customer contacts investment advisor Inv.Advisor Enters instruction and sends to HQ Dealer Bulks and checks price quotes Dealer Strikes a deal and enters on ticket Middle office Enters the ticket + checks compliance  Overview Front Office Middle Office

7 How a trade is processed in an institution (2/2) Settlements Pre-settlement matching Cash management Checks USD balances Forex Exchanges currencies Clearer Securities deliverd Reconciliation Reconcile cash, securities Investigations Investigate if problems occur Accounting Book in customer’s account Reporting Inform the customer  Overview Back Office

8 Table of Contents Back office structure and functions  Overview of a financial institution landscape  Why a back office ?  A central department  Some back office issues to conclude

9 Why a Back Office ? A simplified model Front office Middle office Back office  Why a back office ?

10 Front Office: the place where the deals are done Front office Middle office Back office Trade execution Heavy IT investments Bloomberg, Reuters, …  Why a back office ?

11 Middle office: the go-between among FO & BO Front office Middle office Back office Compliance check Flash P/L for Front Office Management of complex deals (Entering tickets) FO Technical support (curves, rates)  Why a back office ?

12 Back Office: the final stage Front office Middle office Back office Matching Settlements Reconciliations Reporting  Why a back office ?

13 Table of Contents Back office structure and functions  Overview of a financial institution landscape  Why a back office ?  A central department  Some back office issues to conclude

14 Back Office A central support Department in a financial institution Payments TreasuryTrade Securities Back office  A central department Settlements Reconciliations Investigations Cash management Foreign exchange Customer reporting Static Data Corporate actions

15 List of back office functions Settlements Reconciliations Investigations Cash management Foreign exchange Customer reporting Static Data Payments Corporate actions Back office  A central department

16 Settlements department  Assure that all trades that were executed in the front office are settled on time  Pre-settlement matching  Ensure correct settlement on settlement date  Usually organised by country e.g. international settlement and domestic settlement Failed settlements can cost the institution a lot of money Settlements Back office  A central department

17 Cash management department  Check all the balances at correspondent banks  Ensure that money is available to finance trading and payments activity  Invest available funds overnight to ensure best return Cash Management Back office  A central department

18 Foreign exchange department  Ensure correct settlement of the foreign exchange transactions  Handle the administrative part of the foreign exchange deal (e.g. sending SWIFT MT 300 confirmations) Foreign Exchange Back office  A central department

19 Payments department  Ensure payments are made  Send payments instructions over SWIFT or other means of communication  Follow up on the payment instruction Payments can also originate from securities or foreign exchange deals Payments Back office  A central department

20 Reconciliation department  Reconcile positions for cash and securities  Reconcile movements for cash and securities where needed  More and more automated Reconciliation Back office Reconciliation systems can automate up to about 95 % of reconciliation items  A central department

21 Customer reporting department  Important aspect of customer service because of its visibility to the customer  Once settlement and reconciliation is done  Well automated nowadays  Push and pull distribution methodology Customer reporting Back office  A central department

22 Investigations department  More complex area in the back office  No real automation opportunities  Close management monitoring required Investigations Back office Institutions have been seen to have Millions of USD outstanding in investigations for years  A central department

23 Static data department Data scrubbing and checking Internal feeds e.g. customer information External feeds e.g. Bloomberg, Reuters Back office processing Securities data Customer data Corporate actions information  A central department

24 Corporate actions department Mandatory corporate actions Voluntary corporate actions Bank Issuing company Investor Bank Issuing company Investor Communication for informationCommunication triggers decision ok ?  A central department

25 Some other department  Pre-trade compliance  Post-trade compliance Compliance Back office Efficiency department  Business requirements  Project implementation  Efficiency enhancements Investment funds  NAV department  … …  A central department

26 Table of Contents Back office structure and functions  Overview of a financial institution landscape  Why a back office ?  A central department  Some back office issues to conclude

27 Some back office issues to conclude…  STP, still the buzzword in back office processing?  T+3,T+2,T+1,T+0 What is the discussion all about?  How can a failed trade cost money to the institution?

28 ©2005 Deloitte S.A. Member of Deloitte Touche Tohmatsu