DEALING ROOM IN BANKS

NAME:PATEL PARTH S
ID:19BBA088
 DEALING ROOM
■ The Dealing Room is the brain of the bank which manages Investment
portfolio of the entire bank.
■ The dealing room is an area within the bank responsible for the purchase
and sale of currencies, and the management of bank funds.
■ Front office is the dealing room of the treasury department and
responsible to take the decisions regarding the trading and investment.
■ The dealing room is headed by chief dealer, who is in charge of the
front office.
 Dealing Room Function
1. Performs the preliminary functions of treasury operation
2. Maintains the limit of individual deals and dealers.
3. Deals in interbank transactions, currency trading, placement decisions
and funds management.
4. Maintains the balance of position of currency.
5. Determination of exchange rate and interest rate for money and capital
market securities.
6. Maintain the liquidity position of the bank including cash reserve ratio
management.
 MEAING OF DEALER

■ Dealers do a host of transactions in different currencies in the interbank market or for

customers.
■ In view of the large volumes, transactions offset one another leaving net open
(uncovered) positions in various currencies.
■ The Treasury Front-Office maintains and manages all the forex positions of the bank.
■ Dealers may or may not cover customer's deals immediately, depending upon the
market situation, movements and dealers views on the markets.
 Dealer Maintain Two Positions
■ A dealer has to maintain two positions- funds position and currency
position.
■ The funds position reflects inflows and outflows of funds i.e. receivables
and payables
■ A mismatch in funds position will throw open interest rate risks in the
form of overdraft interest in the Nostro a/c, loss of interest income on
credit balances, etc.
■ Currency position deals with overbought and oversold positions, arrived
after taking various merchant or inter-bank transactions and the dealer is
concerned with the overall net position.
Roles and Responsibility of dealer

1. Maintains the limit of individual deals and dealers.

2. Deals in interbank transactions, currency trading, placement decisions
and funds management.
3. Maintains the balance of position of currency.
4. Determination of exchange rate and interest rate for money and capital
market securities.
5. Maintain the liquidity position of the bank including cash reserve ratio
management.
 Roles and Responsibility of dealer

6. Determination of the daily foreign exchange rate for cash, tom, spot and
forward transactions. Tom contract is the delivery is to take place on the
next business day when the banks are open for business.
7. Maximizing returns on cash investments.
 Access Restriction

■ The dealers have access to global live prices of various products through
their various communication tools, so they are typically housed inside a
covered room known as the "dealing room" where the access is generally
restricted only to the dealers and the related personnel.