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Operations specialists usually sit in the middle or back offices. They are behind the scene to support the front office’s daily work, to make sure the transactions are well settled and documented. However, some institutions may team up people across the offices – functionally and geographically – and bring up a federation or a new structure to create synergy. There are usually a number of key divisions under Operations:
Treasury operations division is responsible for liquidity management, investment and fund administration. It oversees the daily working capital flow, prepares forecast of cash receipts and disbursements, and ensures excess cash balances being invested properly or considers borrowing for operating needs. They may use hedging tactics to mitigate the interest rate or foreign currency risks.
Treasury operations lie at the heart of a financial institution as it makes sure the institution remains financially secure and able to function effectively. It is also responsible for liaising with related regulatory bodies, ensuring its reserve and capital positions staying at the appropriate levels.
Financial institutions deal with enormous amount of equity, FX and fixed income trading which requires timely settlement with clearing houses. Take Hong Kong stock trading as an example, brokers and custodians are able to monitor their securities settlement activities through the clearing system terminal (namely, CCASS).
The clearing house provides money settlement services following the delivery of securities in CCASS. Participants have to establish an account at a designated bank and authorize the clearing house to debit or credit the bank account.
Corporate Action Operations
Corporate actions are events initiated by a listed company that affects the rights attaching to the company’s issued shares. Some events (e.g. cash dividend payout) are rather simple and no action is required from shareholders; while some others (e.g. rights issue and spin-off) are more complex and a response from shareholders is required.
To ensure fair and orderly trading in the secondary stock market, it is important for listed company to schedule and disclose the corporate actions properly and timely. Accurate and adequate information about the corporate actions should be disseminated to all relevant market participants.
Trade Support Operations
Trading desk is one of the most fast-paced divisions within a financial institution. Trade support specialists act as the primary contact for queries for the trading team. They work closely with sales, settlement colleagues as well as clients who may ask for a trade solution or any problem throughout the lifecycle of a trade.
In addition, the specialists may help traders or portfolio managers in identifying and monitoring certain equity or bond investment opportunities. They are also responsible for tracking the trade flow and ensuring that risk management is well in place. System testing, transaction reporting and procedure review are part of their duties as well.