Products and Services at an Investment Bank

Primary Dealer Operations Audit

1

BMO Harris Capital Markets Corp (BMOH) is a Canadian investment dealer and member of the Investment Industry Regulatory Organization of Canada (IIROC). It is a subsidiary of BMO Financial Group. BMOH offers a full range of investment and corporate banking products and services to Canadian and U.S. clients. Its operations functions consist of securities trading, underwriting, research, and retail brokerage. I came to know about this organization when I was researching investment firms that offer summer internships for undergraduates.

BMOH’s mission is: “To boldly grow the good in business and life. It guides every decision we make, and inspires and empowers us to do more for the customers and communities we serve.”

The Operations function contributes to the organization’s mission insofar as it strives to offer corporate, institutional and government clients access to a wide variety of financial services.

The primary goals of BMOH are:

· Annual revenue growth

· Protect Primary Dealership title within the eyes of the Federal Reserve Bank

· Protect and grow investor relationships globally both private and institutional

· Become the leading market maker across all asset classes

Forecasting primary dealer processes to facilitate the achievement of these goals include the following:

· Primary Dealers are required to competitively participate in all U.S. Government Security Auctions regulated under the Federal Reserve Bank

· Forecasting of the U.S. Treasury Fixed Income Market is used to competitively and accurately price the bidding

· These forecasts are obtained by using quantitative analysis obtained through prevalent market data using the most up to date and speed driven software

· Forecasting is also obtained through world economic news

There is no conflict between the Operations function and other functions (marketing, accounting, HR, etc.). While it is not uncommon for the goals or objectives of different business functions to conflict with one another, in the case of BMO Harris Capital Markets Corp., it appears that the Operations function is able to effectively integrate with the goals of other functions within the company. For example, Marketing may have a goal of increasing sales by 10% in the next quarter, while Accounting may have a goal of reducing expenses by 5% during the same period. By working closely together, the Operations team is able to find a way to increase sales while also reducing expenses. In this way, it is clear that the Operations team at BMO Harris Capital Markets Corp. is able to successfully align its goals with those of other company functions.

However, BMOH does have multiple products/services that can create conflicting demands on the operations function. It is after all a full-service investment bank that offers an array of services, including capital markets, commercial banking, and asset management. Given the range of services offered, it is not surprising that the organization has to manage a number of conflicting demands on its operations function. For example, the capital markets division may be focused on short-term gains, while the asset management division may be more concerned with long-term growth. Similarly, the commercial banking division may be more risk-averse than the other divisions. As a result, BMOH has to carefully balance the different demands of its various divisions in order to ensure that the overall organization is successful.

2

Operations activities or processes that use forecasts typically include production planning and inventory management. Forecasts are obtained through a variety of methods, including trend analysis, time-series analysis, and regression analysis. The firm assesses forecast accuracy on an ongoing basis in order to improve the accuracy of future forecasts. Assessment methods include error analysis and tracking forecasts against actual results. BMO Harris Capital Markets Corp. has a strong focus on forecasting accuracy and strives to continuously improve the accuracy of its forecasts. First, the company looks at the overall accuracy of the forecast. This includes comparing the actual results to the forecast and calculating the error rate. Second, BMO Harris Capital Markets Corp. looks at the accuracy of specific items in the forecast. This involves identifying which items were accurately predicted and which were not. Finally, the company looks at the accuracy of the forecast over time. This helps to identify trends in accuracy and to identify any areas where improvement is needed.

3

BMO Harris Capital Markets Corp. offers two major types of products: investment banking and capital markets. Investment banking includes a wide variety of services, such as mergers and acquisitions, initial public offerings, and corporate finance. Capital markets refers to the market for stocks, bonds, and other securities. BMO Harris Capital Markets Corp. is a leading player in both investment banking and capital markets.

The company\\\\\\\'s product mix is diverse, and its products are suitable for a wide range of clients. For example, BMO Harris Capital Markets Corp.\\\\\\\'s investment banking services are ideal for companies that are looking to grow through acquisition or initial public offering. Meanwhile, its capital markets services are perfect for investors who are looking for exposure to the stock market or bond market.