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Support staff must have a separate line of reporting from the front-office staff. Unsuccessful results for trading may lead to the shrinking or elimination of a trading operation. Front-office personnel almost always command higher compensation and prestige.
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Оригинальное название
Financial Risk Management a Prket and Credit Risk- 2 Edition 62
Support staff must have a separate line of reporting from the front-office staff. Unsuccessful results for trading may lead to the shrinking or elimination of a trading operation. Front-office personnel almost always command higher compensation and prestige.
Support staff must have a separate line of reporting from the front-office staff. Unsuccessful results for trading may lead to the shrinking or elimination of a trading operation. Front-office personnel almost always command higher compensation and prestige.
advantage that uncovering only one clearcut case of falsification is enough
to uncover the fraud; the advantage of the creator of the fraud is the multiplicity of methods the creator can employ to discourage this discovery. The most fundamental control for preventing fraud is by separating the responsibilities between the front office and the support staff (middle office, back office, and controllers), making sure that all entries of transactions and management reporting systems are under the complete control of the support staff. To make this separation of responsibilities work, the support staff must have a separate line of reporting from the frontoffice staff and compensation that is reasonably independent of the reported earnings of the business area being supported. As much as possible, the reporting lines and compensation structure should align support staff interests with those of management rather than with those of the front office. However, even the bestdesigned structures of this type are subject to pressures in the direction of alignment of support staff interests with frontoffice interests. Constant vigilance is required to fight against this. These pressures include:
Support staff compensation cannot be completely independent from
trading performance. At a minimum, unsuccessful results for trading may lead to the shrinking or elimination of a trading operation along with associated support staff positions. Since trading profits are the ultimate source from which expenses get paid, it is difficult to avoid some linkage between the trading performance and level of compensation. Section 4.1.4 presents a vivid example of how this pressure was felt in practice at AIB. Frontoffice personnel almost always command higher compensation and prestige than members of the support staff, usually considerably higher. Often, support staff members are hoping to eventually move into frontoffice positions. Frontoffice staff can afford to offer informal incentives to the support staff for cooperation such as helping them seek frontoffice jobs, giving access to perks such as lavish meals and free tickets to otherwise unavailable sports events, and even offering outright cash bribes. The higher prestige of frontoffice positions and the reality of the greater market experience of frontoffice personnel relative to support personnel can be utilized to place tremendous pressure on the support staff to adopt frontoffice views. Since the support staff has responsibilities for supporting the front office as well as for supporting management, their ratings for job performance are often heavily dependent on the views of frontoffice personnel, who are likely to be working far more closely with them than management personnel.