Middle Office - Definition
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Middle Office Definition
In an organization, the middle office is the office in charge of its investments and other financial activities, losses, and profits of the organization are also managed by the middle office. Financial services institutions cannot exist without a middle office, this is the department that is responsible for IT of the organization, and managing its risks, profits and losses of the institution. There are three sections of a financial services institution, these are the front office, middle office, and back office. While the front office is in charge of customer relations and sales, the middle office handles the risks, losses, and profits of the organization, as well as its IT.
A Little More on What is Middle Office Work
The middle office is quite different from the front and back office, while the back office is the administrative department that provides support for the activities of the institution, the front office is the department that interacts with clients and offers sales and services. The middle office, despite not creating direct revenue for the institution, helps in managing the revenue created by other offices and accounts for losses and profits as they occur. Middle offices play essential roles in financial services institutions. With the development in technology, the IT of a company is best left in the hands of an expert and not just handled by the front or back offices which were the traditional practice. The creation of the middle office has impacted the effective management of a company's IT, risks (losses) and profits.
Requirements of the Middle Office
Before we delve into the requirements of a middle office personnel, it is essential to outline their key roles. These personnel in charge of processing deals made at the front office, tracking the deals and ensure that the profits and losses are well accounted for. The key requirements for middle office personnel are:
- ICT skills and knowledge
- Knowledge of compliance
- Managerial competence and accounting skills
- Knowledge of executing deals or agreements and tracking losses and profits in deals.
For certain companies, there are legal support personnel or officers that work with the middle office. They help in ensuring compliance with laws and regulations and also handle the legal matters of the firm.
References for Middle Office