IB FRONT, MIDDLE AND BACK OFFICE
Investment bank acts as a link between investor and borrower, they are specialized in large complex financial transactions such as underwriting, acting as an intermediary between a securities issuer and the investing public, facilitating mergers and other corporate reorganizations and acting as a broker or financial advisor for institutional clients.
FUNCTIONS OF IB
Initial public offering
underwriting services
financial advisory
mergers and acquisitions
securities trading and brokerage
research analysis
asset management.
FRONT OFFICE
IB - place were IB provides services to its customers on how to raise capital through IPO and also advises on Mergers and Acquisitions, corporate action.
SALES AND TRADING
here the IB, on behalf of its customers and for itself buys and sells products. The traded include anything from commodities to specialized derivatives.
EQUITY RESEARCH
analysts closely follow companies and industries to write reports about their future earnings prospects. other financial professionals by these research report from these IB and use the reports for their own investment analysis.
Other prominent front office functions
commercial banking
merchant banking
global transactions banking
Middle office
risk management and legal compliance.
obligation of middle office is to make sure that IB doesn't involve in uncertain or unusual activities that could have negative implications on IB reputation or financial health of the IB.
risk management must ensure that front office, amid a capital raising process, is not placing the entire firm beyond a reasonable degree of risk by underwriting certain highly speculative securities.
Examples of middle office roles.
Risk management
financial treasury
corporate strategy
compliance
legal counsel
BACK OFFICE ROLE
operations support team the back office refers to the operations team and technology staff(IT) that support the firm's internal processes and systems.
Roles in back office
Accountants
IT staff
Human resource
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