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Finance meets technology Life as a Middle Office Analyst at Optiver

In the fast-paced world of trading, ensuring that operations are both accurate and efficient is critical to success. At Optiver, the Middle Office plays a crucial role in making this happen, sitting at the crossroads of finance and technology.

A common misconception about the Middle Office is that it’s primarily administrative and somewhat detached from the trading dynamics of the company. At Optiver, the Middle Office is integral to the trading process, bridging the gap between financial operations and technical innovation.

As a Middle Office Analyst at Optiver’s Amsterdam office, I’ve seen firsthand how our team supports trading by maintaining data integrity and facilitating smooth operations. In this post, I’ll delve into how the Middle Office contributes to the overall efficiency of our trading activities and the collaborative culture that drives continuous improvement and innovation across our team.

My journey to Optiver’s Middle Office

After studying Finance & Organisation during my Bachelor’s degree, I had the opportunity to study abroad in San Francisco—exposure that sparked my interest in data analytics and its growing relevance to finance. I added several programming courses to my studies and later pursued a Master’s in Corporate Finance, followed by a Master of Data Science.

While working part-time at the Amsterdam Stock Exchange and New-10 (ABN AMRO), I gained practical experience in the financial sector, but realised that traditional corporate finance roles didn’t fully align with my interests. My search for a role that combined both finance and technology ultimately led me to Optiver’s Middle Office, where I could focus on automating core processes while drawing on my knowledge of financial fundamentals.

The role of the Middle Office at Optiver

Optiver is a leading global trading firm that specialises in providing liquidity to financial markets. But in a world where speed and data accuracy are crucial, smooth trading operations require more than just advanced strategies—they need a robust self-audit.

The Middle Office ensures that trades and associated information are accurately recorded and reconciled on a T+1 basis. The Middle Office acts as the gatekeeper, ensuring that any discrepancies between our records and external accounts are identified and resolved before the market opens. A meticulous attention to detail is vital, since failing to align with the external view can lead to unanticipated risks.

In addition to trade reconciliation, the Middle Office is responsible for reconciling all trading fees paid externally. Having a thorough understanding of the cost drivers behind our trading operations and accurately communicating these insights to traders, directly influences trading decisions and helps spur the development of more cost-effective strategies.

Our team of analysts comes from diverse nationalities and educational backgrounds, including econometrics, fintech, engineering, finance, and data science. This diversity brings fresh ideas and innovation to the table, making our team central to Optiver’s success. United by a shared passion for finance and a commitment to leveraging technology, we focus on streamlining processes and minimising manual tasks.

The operational side of the job: A day in the life

We manage the daily operational workload through Middle Office shifts. This allows team members who are not on shift to dedicate their time entirely to improving and automating our daily processes. Typically, you might spend about 30-50% of your time on actual daily operations, with the remaining time focused on more technically oriented projects. Here’s a breakdown of what a typical operational day could look like.

Currency exposure alignment

Each day begins with ensuring that the currency exposure of our trading activities aligns with external views, by analysing daily changes in exposure and coordinating with Trading to make any necessary adjustments. Accurate currency exposure management is crucial for managing risk and impacts our trading decisions throughout the day.

Trade reconciliation

Next we ensure that the trades we believe were executed match the actual trades received in our clearing accounts. Given the volume of daily trades, there’s a significant risk of discrepancies. As gatekeeper, Middle Office identifies and resolves any mismatches before the market opens—vital to avoid unanticipated risks such as unintended delta exposure.

P&L reporting

We then prepare the daily P&L reports at both desk and company levels, and critically analyse the results, explaining any irregularities compared with Trading’s expectations. The P&L of trading activities includes the net result of daily trades, end-of-day valuations, fees, and dividends received for positions held on ex-dividend dates—all meticulously reconciled by the Middle Office against external data to ensure accuracy. P&L is reported externally at month-, quarter-, and year-end and must comply with regulatory standards.

Fee estimation and reconciliation

We are responsible for estimating and reconciling all trading fees paid externally. Our automated fee cost estimation system runs every 15 minutes, calculating and posting fees to our P&L with minimal manual intervention. This system provides traders with a clear understanding of their cost structure, enabling them to develop more cost-effective strategies—crucial for optimising trading performance.

Dividend reconciliation

To ensure accurate projection of the dividends we are entitled to, we perform a daily comparison against trading expectations for any dividends due that day. This process helps ensure that our profit and loss accounts are correctly updated on the dividend’s ex-date. On the following day, our clearing partner will have projected their dividends as well, and we reconcile our figures against theirs to ensure everything matches up.

Accurate dividend reconciliation is essential for maintaining precise financial records and preventing discrepancies that could affect our overall financial results.

Finalising and reporting

Once all individual components—trade reconciliations, fee estimations, P&L reports and dividend reconciliations—are verified and aligned, we finalise and report the daily P&L. The comprehensive process underscores how important accuracy is in our role and shows just how deeply intertwined our operations are with the firm’s broader financial functions.

Technical challenges and innovation

Given the complexity of our daily operations, one of the most significant technical challenges is ensuring that all processes are robust and error-free. Operating the Middle Office of a large trading firm like Optiver requires automating processes while maintaining a careful balance of human oversight to guarantee accuracy.

We handle vast amounts of data due to the high trade volume, requiring well-crafted queries and effective data storage. SQL therefore underpins all our processes as a cornerstone of our operations. We continually work to enhance and optimise data retrieval, storage and visualisation to ensure they remain efficient and robust.

Given the limitations of Excel in managing large datasets and our goal of automation, much of our data processing is conducted in Python. This approach not only helps visualise and aggregate data from different sources but also minimises manual human intervention—our fee cost estimation system mentioned above, which uses SQL and Python to calculate and post fees to our P&L every 15 minutes, is one example.

Over the past two years, it’s been rewarding to witness the evolution of our processes through automation. We have significantly streamlined some daily tasks and have fully automated others. It’s fulfilling to keep pace with the dynamic world of trading, while ensuring rigorous oversight of all key processes and reducing the daily manual workload.

Collaboration with Tech: A synergistic approach

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