Principles of Quantitative Development

2.2 FRONT OFFICE

The front office is the market-facing side of a financial institution. It consists of economists, structurers, sales staff, trading desks, desk quants, desk risk managers, hedging activities and desk system/platform development and support.

Focusing on the structured or exotic products trading, we can describe concisely the various business units of the front office and their functions as follows. Figure 2.2 shows a detailed look at the structure of a typical front office, and the following discussion is based on it. Note that the organizational structure of the front office can vary significantly among institutions.

Figure 2.2 The structure and process flows in the front office of a typical financial institution. Arrows indicate activities and workflows. While economists, sales/structuring teams and trading desks interact with the external world, quants and quantitative developers provide the internal muscle. The trading platform mediates most of the FO interactions with the rest of the bank

2.2.1 Economists

Economists associated with the front office are there to predict the future. They study the market trends and summarize the data for traders, highlighting potential opportunities and pitfalls. Acting as the bank's voice to the media, the economists are usually the people who appear most often in the news. Through their media appearances, they may even affect ...