Upon completion of this program, participants will be able to:

• Explain the critical role and principles of the **three lines of defense** (Front, Middle, Back Office).
• Design and implement robust procedures for trade confirmation, matching, and settlement.
• Master the daily functions of the Middle Office (risk reporting, compliance, performance attribution).
• Describe the operational mechanics of the Back Office (custody, reconciliation, corporate actions).
• Analyze and mitigate the key operational and settlement risks (e.g., fail risk, Herstatt risk).
• Understand the legal and compliance requirements for trading desks (e.g., FX Global Code, internal limits).
• Evaluate the technology requirements for a modern, automated Middle and Back Office system.
• Formulate a comprehensive operational risk management and business continuity plan for reserve operations.

• Central Bank Middle and Back Office Operations Managers
• Compliance and Internal Audit Professionals for Treasury/Reserves
• Risk Reporting and Performance Measurement Analysts
• Commercial Bank Securities Operations and Settlement Staff
• IT and Data Architects supporting Reserve Management Systems
• Custodian Bank Relationship Managers

Trade processing simulation, Group project on designing a compliance monitoring framework, Workshops on performance attribution calculation, Case studies on historical settlement failures, Technical deep dives into SWIFT messaging, Role-playing internal audit interviews.

Unit 1: The Three Lines of Defense and Governance

• The principle of segregation of duties across the Front, Middle, and Back Office.
• Defining clear roles, responsibilities, and accountability for all operational steps.
• Governance for the selection and management of external custodians and counterparties.
• The legal framework for trade confirmations and contract enforceability.

• Implementing the **FX Global Code** and other market conduct standards.
• Internal compliance checks against investment policy limits and regulatory mandates.
• The role of internal audit in reviewing operational controls and data integrity.
• Anti-Money Laundering (AML) and Sanctions compliance for reserve transactions.

Unit 2: Middle Office Functions and Risk Control

• Real-time monitoring of trading limits, counterparty exposure, and policy adherence.
• Calculating and reporting daily Market Risk (e.g., VaR, Duration) and Credit Risk.
• Management of collateral for derivatives and secured financing transactions (margin calls, substitution).
• The process of exception reporting and escalation of policy breaches.

• Methodologies for trade valuation and mark-to-market pricing.
• **Performance Attribution** (brute-force vs. sequential methods) for fixed income and currency.
• Calculating and reporting ex-post performance metrics (e.g., Sharpe Ratio, tracking error).
• Governance for the selection and use of external data vendors (e.g., pricing services).

Unit 3: Back Office and Settlement

• The process of trade affirmation and confirmation (e.g., using SWIFT messages, platforms).
• Settlement mechanics for fixed income (DvP) and foreign exchange (PvP).
• Managing and mitigating settlement failure risk (fail risk) and the associated penalties.
• The role of the Back Office in corporate actions processing (e.g., coupon payments, redemptions).

• Selecting, monitoring, and managing relationships with global custodians.
• The process of daily and monthly reconciliation of cash and securities positions.
• Operational security and controls for asset transfer and payment instructions.
• Managing the legal title and safekeeping of assets in different jurisdictions.

Unit 4: Technology and Operational Resilience

• Requirements for modern Portfolio Management Systems (PMS) and Risk Management Systems (RMS).
• Automation of trade processing, compliance checks, and reconciliation.
• Data architecture and the governance of critical market data (pricing, credit ratings).
• Implementing API integration for straight-through processing.