Glossary · Operations
Back Office
The back office is the set of post-trade functions, including settlement, fund accounting, NAV, investor services and reporting, that complete and record transactions.
The back office handles everything required after a trade is agreed and validated: settlement with custodians and counterparties, cash management, fund accounting in the ABOR, NAV calculation, fee accruals, investor services and transfer agency, financial statements, audit support and regulatory filings. For many funds, much of the back office is performed by a fund administrator.
The back office is where the fund’s official record is produced, so its accuracy affects investors directly. Errors in this layer can lead to mispriced subscriptions and redemptions, incorrect investor statements or qualified audit opinions.
Pitfalls include weak links to the middle office, so trade-level issues arrive late; insufficient segregation of duties over cash movements; and manual processes that do not scale as the number of funds, share classes or investors grows. Clear ownership of each post-trade step, documented procedures and daily controls over cash and positions are what distinguish an institutional back office.
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