Overview of Specialized Professionals and Functions in the Financial sector

1. For Internal use only
Overview of specialized functions and
business areas in the Financial sector
May 2016
Gerard Albà Soler

2. 2 Finance Professionals
For Internal use only
Contents
1. Asset Management
a. Asset Management
b. Risk Management
c. Compliance
d. Middle Office and Operations
e. Internal Audit
f. Legal, Finance, Onboarding and Other
2. Investment Banking
b. Global Markets
c. Corporate Finance
d. Research
e. Transaction Banking
f. Risk Management
g. Compliance, Internal Audit
h. Back Office
i. ALM
j. Other Departments
3. Private Banking (Wealth Management)
4. Commercial Banking

3. Finance Professionals3
For Internal use only
Asset Management
Asset Management (Front-Office)
Risk Management
Compliance
Middle Office
Internal Audit
MANAGEMENT
COMPANY
Legal, Onboarding, Other
Fund Administrator (Back-Office)CUSTODIAN (Bank)

4. Finance Professionals4
For Internal use only
Asset Management: asset managers (Front-Office)
 Key functions:
 Fund and Portfolio management. Investment management
 Research (Buy side)
 Sector and Strategy specialists (Equities, Fixed Income, Alternatives , etc)
 Quantitative Investment Strategies (analyst and trading)
 Fund Analysts (FoF)

5. Finance Professionals5
For Internal use only
Asset Management: Risk Management
 Key functions:
 Monitoring and Control of quantitative and qualitative risks of funds (market
risk, liquidity, counterparty credit risk)
 Detect and solve breaches of regulatory (compliance) limits or investment
policies. Instrument eligibility
 Measurement systems and controls
 Policies and procedures
 Asset valuation
 Operational Risk
 UCITS, AIFMD
 Independent function (CRO - Conducting Officer – four eyes principle)

6. Finance Professionals6
For Internal use only
Asset Management: Compliance
 Key functions:
 Management of compliance risks (legal and regulatory, reputation, litigation,
codes of conduct and good practices)
 Due Diligence of counterparties and delegates
 Internal policies, procedures and guidelines
 Prevention of money laundering
 Confidentiality of information
 Insider trading and market abuse
 Relationship with the regulator
 Ethical environment and best practices

7. Finance Professionals7
For Internal use only
Asset Management: Middle Office
 Key functions:
 Trade matching and confirmation of transactions
 Reconciliation of trades and positions of multiple order management systems
(custodian, management company, administrator)
 Over-the-counter (OTC) derivatives processing
 Corporate actions, proxy voting (custodian)
 Investment and fund accounting control.
 Control of delegates (fund administrator, custodian)

8. Finance Professionals8
For Internal use only
Asset Management: Internal Audit
 Key functions:
 Review the administration and governance of the organization
 Assess internal control’s efficiency and effectiveness
 Monitoring of compliance with the regulation
 Assess the adequacy of the administrative, accounting and IT organization
 Assess the adequacy of the segregation of duties and the execution of trades
 Direct reporting to the Board of Directors

9. Finance Professionals9
For Internal use only
Asset Management: Fund Administration
 Key functions:
 Fund accounting (NAV calculation; income and expense accrual)
 Accounting for all daily activities of the fund (buy/sells, income accruals)
 Reconciliation of cash and fund share transactions
 Prepare financial statements of funds and sicavs
 Transfer Agent:
 Maintain a register of fund investors/shareholders
 Account balances of transactions (subscriptions/redemptions)
 AML

10. 10 Finance Professionals
For Internal use only
Contents
1. Asset Management
a. Asset Management
b. Risk Management
c. Compliance
d. Middle Office and Operations
e. Internal Audit
f. Legal, Finance, Onboarding and Other
2. Investment Banking
b. Global Markets
c. Corporate Finance
d. Research
e. Transaction Banking
f. Risk Management
g. Compliance, Internal Audit
h. Back Office
i. ALM
j. Other Departments
3. Private Banking (Wealth Management)
4. Commercial Banking

11. Finance Professionals11
For Internal use only
Investment Banking
Global Markets (Front-Office)
Corporate Finance
Research
Transaction Banking
Risk Management
INVESTMENT
BANK
Compliance
Internal Audit
Back Office
ALM
Other Departments: Capital
Modelling, Middle Office, IT,
Finance, HHRR, etc

12. Finance Professionals12
For Internal use only
Investment Banking: Global Markets (Front-Office)
 Key functions:
 Trading and Sales of securities: Equities, Rates, FX, Credit, etc
• Brokerage. Cash securities
• Market Making
• Derivatives books (Equity derivatives, IR derivatives –Swaps, Caps/Floors,
etc- , Credit derivatives –CDS-, FX, etc)
 Structured products:
• Investment products
• Hedging instruments (Rates, FX import/export, etc)

13. Finance Professionals13
For Internal use only
Investment Banking: Corporate Finance (Capital Markets)
 Key functions:
 Equity Capital Markets
• Equity Placements:
− IPOs
− Rights Issues
• Block trades, Tender offers
 Debt Capital Markets
• Bonds issues
• Private placements
• Capital structure advisory, restructurings, convertible bonds, etc
 M&A Advisory
• Mergers & Acquisitions
• Management buy-outs, takeover/defense strategies, Valuations etc

14. Finance Professionals14
For Internal use only
Investment Banking: Research
 Key functions:
 Equity Research (sell side)
• Reports on businesses in various sectors
• Ratings and price targets (valuation) for stocks
• Financial modelling
• Fundamental analysis, Technical analysis, Quantitative analysis
 Credit Research (sell side)
• Debt reports on businesses in various sectors
• Credit ratings and investment recommendations
• Financial modelling
• Fundamental analysis, Technical analysis, Quantitative analysis

15. Finance Professionals15
For Internal use only
Investment Banking: Transaction Banking
 Key functions:
 Global custody
 Global correspondent banking
 Global brokerage (B2B)
 Trade finance

16. Finance Professionals16
For Internal use only
Investment Banking: Risk Management
 Key functions:
 Monitoring and Control of:
• Market Risk: Trading Risk, VaR and Stress Testing, Modelling and Reporting
• Counterparty Credit Risk: CVA, EAD, PD, LGD etc. Credit Analysis and
approval. Economic Capital
• Liquidity Risk
 Valuation of securities and portfolios
 Financial modelling of derivatives and complex instruments (i.e. OTC)
 Collateral management and Credit risk mitigation
 ALM Risk Management

17. Finance Professionals17
For Internal use only
Investment Banking: ALM (Asset-Liability-Management)
 Key functions:
 Treasury
 Bank’s Balance Sheet Liquidity Management
 Management of Interest Rate Risk and FX Risk
 Capital Risk Management
 Financial Risk management of propietary market risks