Written by:
Image
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades.

Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

View all posts
Updated August 5, 2020

What is a Back Office?

In the finance world, a back office processes the day-to-day paperwork and record-keeping associated with trades, confirmations, settlements and other financial transactions.

How Does a Back Office Work?

For example, let’s assume you visit your broker in her office at 123 Main Street in Anytown, USA. You chat for a while, then give her instructions to execute three trades in your portfolio.

Your broker executes the trades, and although she does handle some paperwork regarding the trades, the broker’s back office creates and processes most of that paperwork, including the confirmation statements, account records, clearinghouse matters, and proofs of settlement. The back office might also do the accounting for the broker’s team, deal with legal matters as they arise, and communicate with regulators on compliance issues. This back office does not necessarily share the same location with your broker; a back office can be virtually anywhere.

Why Does a Back Office Matter?

It’s easy to say that the back office is simply “administrative support” for “the people that matter,” but the truth is back offices are massive, crucial, often-unseen and usually unappreciated segments of the financial services industry. In many ways, they are the sausage factory that does the day-to-day work of the industry; without back offices, the financial industry would not work. Back offices are also responsible for managing the regulatory compliance related to trade execution and account records.

Ask an Expert about Back Office
At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Back Office.
Be the first to ask a question

If you have a question about Back Office, then please ask Paul.

Ask a question

Read this next

Don't Know a Financial Term?
Search our library of 4,000+ terms
 - profile
Ask an Expert about Back Office

By submitting this form you agree with our Privacy Policy

Share
close