Typical software structure of a Broker-Dealer

Every broker dealer has three departments:

• Front-Office
• Middle-Office
• Back-Office

Sometimes, middle-office and back-office are merged into the single department where the functions of middle-office are split between front-office and back-office.

Front-Office

Front-Office is an application for end users (traders). In general, it should contain:

• Trade Ticket
• Orders History
• List of Positions
• Account Balance

the following components can be included for research and analytical purposes:

• Chart with Technical Analysis
• Market Scanner
• Heat Map

In other words, that is a main entry point for retail customers of the brokerage firm where they can find any information related to the account and do a trade.

Middle-Office

The main function of middle office can be described as “Order Control”. The order control system verifies accounts and securities while it goes into the execution.

• Client Master Database – contains client information required to process transactions and data, such as SSN, State ID, and account funds.
• Security Master Database – contains specific information about  security needed to process transaction, calculate margin requirements, set up dividends and interest payments.
• Orders Matching System – fills the information fields that every order must have.

Back-Office

Back-Office takes the order from the point of execution to the settlement:

• Margin – monitoring client accounts to ensure that they are operating within the Regulation T rules, Self-Regulatory organization rules and Brokerage rules (also known as “house” rules)
• Settlement – optimization of the security of the firm and funding resources in the settlement of transaction.
• Accounting – list of all accounts, security movements, positions and funds.

_{By Leonid Kurguzov, ETNA Software}