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Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

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Keep track of learning progress with our comprehensive data

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Engage with our video hotspots and knowledge check-ins

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Gain CPD / CPE credits and professional certification

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Build, scale and manage your organisation’s learning

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Connect Finance Unlocked to your current platform

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More featured content

Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

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Middle and Back Office Functions in Asset Management

Middle and Back Office Functions in Asset Management

Trevor Pugh

20 years: Trading & hedge funds

In the previous video, Trevor explains the front office functions. In the final video of this two-part video series, he will focus on the middle and back office functions.

In the previous video, Trevor explains the front office functions. In the final video of this two-part video series, he will focus on the middle and back office functions.

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Middle and Back Office Functions in Asset Management

6 mins 58 secs

Overview

While the front office of an asset management company is responsible for creating and selling the products available. The middle and back office ensure everything runs smoothly, they are the operational parts of the business. It includes several different functions and areas, but given the changing environment the firms are operating, many firms are now opting to outsource some of these functions to specialist firms.

Key learning objectives:

  • Understand the purpose of middle and back office

  • Outline the roles of each of the teams in the middle and back office

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Summary

What does middle and back office do and how has it changed in recent years?

Middle and back office keep the show on the road, all of the functions undertaken are crucial for the client’s direct or indirect experience. It includes risk management, legal and compliance, performance measurement and attribution, marketing, client reporting, request for proposal teams, and administration and support. 

Given the increased regulatory requirements and the number of passive funds in the industry there has been downward pressure on costs. Many firms have had to change their operational models to stay competitive and have opted to outsource some of the functions outlined, this way they can focus on manufacturing and business development. 

What do each of the teams do?

Risk management team: 
Calculate the amount of risk being taken by various portfolios and funds. They need to check that the risk is inline with the target and limits agreed with clients. They can measure risk in absolute terms by looking at volatility, but usually it is versus a benchmark. 

Legal and compliance team: 
This area has become extremely important given recent scandals. They ensure legal and regulatory procedures are implemented and followed, such as ensuring portfolio guidelines are clarified and implemented. 

Performance measurement & attribution team: 
This team analyses where performance has been generated. This helps identify gaps in the investment teams and to identify and address any potential weaknesses in the investment decision making process. 

Marketing team: 
The brand, or the feel and look of the company is created here. They will be engaged with the manufacturing and business distribution areas to ensure a seamless production line. 

Client reporting team:
This team pulls together information from the PM and other teams to give clients regular updates on various metrics such as fund performance. They contain information on performance, risk, attribution analysis and a summary. 

Request for proposal team:
This team attempts to convert potential pipeline opportunities into successful mandates. Each potential RFP is best considered in isolation with a clear focus on the company in question. 

Administration and support team:
This will involve trade support, cash management and fund accounting. 

 

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Trevor Pugh

Trevor Pugh

Trevor has worked in finance since 1995. He started his career in investment banking after studying Law at Cambridge and taking a Masters Degree in Financial Services from University College Dublin. Trevor spent 18 years at Barclays investment bank where he became a Managing Director and head of Gilt trading. He currently works as Chief Operating Officer for a hedge fund.

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