A trading operation is the system and workflow behind buying and selling financial instruments—such as stocks, bonds, currencies, or derivatives—either for profit, risk management, or client service.
Key Components of a Trading Operation
1. Front Office – The Traders
Execute trades based on strategies, market signals, or client orders.
May use manual methods or algorithmic (automated) trading systems.
2. Middle Office – Risk and Compliance
Monitors risk exposure.
Ensures trades comply with internal rules and regulations.
Handles trade confirmation
3. Back Office – Settlement and Record-Keeping
Ensures the financial and legal transfer of assets and payments.
Maintains records of trades and reconciles any discrepancies.