Establishment and Development of a Middle Office

Segregation of duties is a core risk management tool employed in the end-to-end Treasury process which prevents a single person or area from having overall control of a financial transaction from initiation to settlement. This principle of separation appears repeatedly in regulatory and established best practice guidelines and reduces the risk of error and the potential for fraud considerably. Ideally, the Treasury operation should be segregated into three discrete functions: front, middle and back offices.

Whether a middle office function already exists or needs to be established, XMI will outline the optimal structure and clearly set out the roles and responsibilities both for the middle office itself and for those areas which interface with it. Our work will be benchmarked to international best practice standards, thereby satisfying, as a minimum, all external regulations. Most importantly, it should be looked upon as a practical means of greatly increasing the chances of avoiding a control breakdown – be it deliberate or accidental – which could cause substantial financial and/or reputational harm.

One significant advantage of a professional middle office function is its ability to provide greatly enhanced reporting and MIS for executive management..