What Is Front Office Trading?

Front office trading is an activity at an investment bank or similar financial institution that focuses on purchases and sales of investment products to benefit the company and its clients. Traders and support staff are both involved in front office trading, assisted by operations in the middle and back office. The size of a company determines how many traders and support personnel are needed, and the company may have multiple office branches to serve clients in different regions. Work in this area of the financial industry can be high risk but may also come with high rewards if a trader is adroit and skilled.

One aspect of front office trading involves meeting with clients to discuss concerns and goals. This helps traders develop investment plans appropriate to individual clients. They can exercise trades on behalf of the client and may make financial recommendations to assist clients in decisions about what to hold, sell, and transfer. This work requires good communications skills, as clients need to be able to understand their options and the risks. Traders who represent their employers must think about the long-term needs of the institution in their trading activities.

Part of front office trading includes research. Traders need to know what is happening in the financial market and they must also be familiar with new financial products. Clients may have questions or could request advice on products. In some firms, new products are developed internally, and the front office trading staff is part of this process. They help design new products and services to meet the needs of their clients while balancing the interests of the company.

As the public face of their employers, staff members in the front office trading department engage in public relations and outreach to win customers and maintain clients. They need to be personable and available to answer questions and respond to concerns. Very large clients like institutions may have a specific trader assigned to them who works primarily on their needs, which can be complex and may change as market conditions shift.

Work in the front office trading department calls for a number of skill sets. Registered brokers and traders are needed, along with computer developers to work on the software used to support activities. Financial analysts are useful, as are public relations specialists. More robust financial analysis including risk assessments takes place in the middle office, where personnel work with the front office to keep trades running smoothly, identify legal issues, and address various trading concerns.