Читать книгу Effective Product Control - Nash Peter - Страница 21

The front office staff have three main objectives:

1. Provide the bank's clients with a suite of products to meet their investment and risk management needs.

2. Risk manage the bank's market and credit risk exposures to safeguard the bank from adverse market movements.

3. Participate in risk-taking (proprietary trading) to generate profits for the bank.

The front office are the most significant stakeholder who product control interact with. In most banks they are considered a client of product control whilst also being a function that product control must monitor and control. There is also a high level of interdependency between the two functions as the front office have a large vested interest in ensuring the P&L accurately reflects their performance.

The front office rely primarily on product control for the following:

• The provision of a daily P&L.

• The reconciliation of this P&L to the desk's P&L estimate (T+0 flash).

• The provision of a new trades report (as valued by the finance systems).

• The analysis of internal charges allocated to the desk and assistance in minimizing those charges.

• Ensuring their foreign currency P&L is sold down correctly at month-end.

• Assistance with the set-up of new traders and sales staff in the bank's systems (e.g., new trading books).

• Assistance and advice when new products are implemented.

• Advice regarding the adoption of new accounting standards.

• The production of balance sheet reports and insight into the drivers of their balance sheet usage.

Product control also rely on the front office to perform their role effectively, which includes:

• Educating product control on the strategy of the desk.

• Providing insight into the markets which the desk are active in.

• Providing a T+0 flash.

• Approving the P&L.

• Explanation of exceptional day one and mark-to-market (MTM) P&L.

• Ensuring the risk management system (RMS) captures all the desk's trades.

• All trades are being valued correctly (includes both end of day marks and models).