Section 2.2. Key Concepts: Front Office vs. Middle Office vs. Back Office

Career opportunities in finance are often characterized as "front office" or "back office" or "middle office." Let's explore each.

Front office: A front office role refers to a position that is either client-facing or revenue generating. Examples of front office roles are as follows:

You interact with clients that wish to buy or sell investments. You help the clients formulate trading strategies, prepare orders, and maintain your firm's relationship with the client.

You perform research analysis to determine whether it makes sense to buy or sell a given stock. Your research is sold to investment manager clients that use it as the basis of their investment decisions.

You structure complex and customized investment vehicles for clients that are carefully structured to meet their investment objectives and tax-minimization objectives.

Back office: A back office role refers to a position that provides support to those in front office roles. Examples of back office roles are as follows:

You are in an operations role, in which you make sure that trades that front office traders in your firm executes for clients are successfully transacted.

You are in a technology role, in which you make sure that your firm has the appropriate hardware and software to allow it to engage in its activities.

You are in a legal role, in which you work to ensure that your firm has appropriately negotiated all necessary contractual agreements with clients.

Middle office: Other roles are referred to as middle office roles. While the distinction between back office and middle office roles are often blurred, some typical examples of middle office roles are as follows:

You are in a credit risk role, in which make sure that your firm appropriately manages to risk that an entity to whom you have provided credit may be unable or unwilling to satisfy its obligations.

You are in a market risk role, in which you make sure that your firm's exposure to various market risks are measured and managed. Examples of market risks include changes in stock markets, foreign exchange, commodity prices and interest rates.

Question:

A client-facing role is referred to as a front-office position

1)True

2)False