Post Kweku, it should still be possible to move out of the middle office

The combined efforts of Nick Leeson, Jerome Kerviel and Kweku Adoboli, each of whom used or appear to have used (it's too early to say definitively in the case of Kweku) their knowledge of back office systems and processes to perpetrate rogue trades, all suggest one thing: no more moves out of the middle office and into the front office.

If you're a trader's assistant, a market risk professional, a product-related compliance advisor, or a product controller, that's what you'll stay. Forget any hopes of becoming a trader; moving people out of the middle office is just too risky.

UBS suggests Kweku perpetrated his alleged fraud by creating "fictitious, forward-settling, cash ETF positions" which offset his real, loss-making trades. His past as a trade support analyst is alleged to have given him insight into gaming the bank's settlement process.

As part of UBS's investigation into what went wrong, recruiters claim UBS is looking at banning all trade support assistants from moving into the front office in future. This is a shame - the bank appears to have helped facilitate such moves in the past, with Adoboli allegedly having been part of its Ascent leadership programme (although UBS was unable to confirm this). It may also be unreasonable. Middle office staff and recruiters claim there's no reason why internal promotions shouldn't still occur.

Was the problem specific to UBS?

According to one sales support professional who used to work at UBS, the issue is not so much people moving from the middle office, but ensuring that traders can't book their own trades.

"At most banks, traders are forbidden from booking the sales confirmation on their own trades," he says. "For some reason, when I was at UBS the traders were allowed to do this. This was a systemic issue - it had nothing to do with people moving from the middle office," he alleges.

Was the problem specific to Delta One?

Interestingly, both Adoboli and Kerviel worked on Delta One desks.

The sales support professional we spoke to claims this was more than mere coincidence. "A lot of Delta One trades involve borrowed securities that are moved on before the settlement date. This can make the settlement process very complicated and is why a lot of people move into Delta One from the back office."

In other words, moving out of the back office and into the front may be less of an issue in other product areas.

Determined traders will always learn how to work the back office - whether they came from there or not

The former head of European product control at one US bank says it makes no difference whether traders have a settlements/middle office past: determined individuals will always learn how the system works.

"Most front office people don't know how the back office works, but there will always be a few who go out of their way to find out," he says. "You have to remember that these are competitive people who are all trying to get one over on each other. If they can gain some advantage by learning about the settlements process, they will.

"What this really comes down to are controls," he adds. "If there are big holes in your control system, it doesn't matter whether people started off in the back office or not."

The best former middle office staff can be the best traders

This senior product controller also claims that some of the best traders have a middle office background

"In some ways, former trade support professionals make excellent front office people. They are very good trading managers," he says. "They put systems and controls in place that prevent more junior traders from taking advantage of known gaps or generating losses from known errors."