Bank Organizational Structure

The bank has 3 sections :
1. Front office
2. Middle office
3. Back office

Front office
Trades that have been executed and entered into the front office trading system should flow through to the back office immediately in an automated environment.

Middle office
It deals with risk management.

Back office
To ensure that all trades have successfully arrived in the back office settlement system, a trade-by-trade reconciliation should take place to identify any potential missing trades. This type of reconciliation can occur though an acknowledgment sent by the settlement system to the trading system within a specified time-frame or by the settlement system detecting non-consecutive/missing trade reference numbers. Procedures for dealing with any missing trades should be in place.
Upon receiving a trade, the back office should immediately validate the trade details against external market data feeds supplied by securities data vendors. Validation should also include checking static data items for potential problems, such as unknown counterparty or security. Problematic trades may require correction and are treated as 'exceptions' as they require manual intervention to correct the issue before processing can continue.

Once the trade details have been validated by the back office, the trade is accepted for settlement and assigned a reference number within the settlement system.