Six of ten buy-side traders want a single unified order and execution management system on their desktop or handheld.
As electronic equity markets have become more complex with multiple trading venues, order types and algorithms taking up bandwidth, traders want a simple, single application to help them do their job more efficiently. To date, no one vendor has come up with this ‘Holy Grail’ OMS/EMS, but the buy-side continues to press for a single system.
While the OMS has to service many factions of an institutional firm, the EMS is built for one purpose: trading. And as equity trading has grown more complex, EMS providers have been challenged to continue to deliver comprehensive solutions.
According to a report from consultancy Greenwich Associates, 61% of the traders surveyed would prefer a comprehensive OMS/EMS platform. Also, 70% of those traders use a third-party EMS.
The survey paneled 258 buy-side traders globally in August and September 2015. The traders worked on equity, fixed-income or foreign exchange trading desks. Survey questions covered such topics as trading-desk budget allocations, staffing levels, OMS/EMS/TCA platform usage, and ATS satisfaction levels.
Despite this preference for integrated systems, Greenwich reported that nearly nine out of 10 traders say they have no plans to change EMS providers in the next year — a finding that reflects both a level of comfort with existing functionality and the continued lack of a true comprehensive OMS/EMS solution.
Traders say they maintain the same EMS for an average of seven years.
Report author Richard Johnson wrote that as the active traders require trading functionality such as configurable trading blotters, real-time depth of market data, charting, and alerts. And they want more control over their order routing too.
“Traditional order management systems certainly provide the baseline capabilities to route orders via brokers’ algorithms but lack the additional controls and color that give those active equities traders an edge,” Johnson said. “For that, buy-side traders are turning to EMS providers.”
Which EMS providers are winning the hearts and minds of traders?
Bloomberg and ITG are the systems of choice. Both vendors, Greenwich reported, are claiming real estate on growing numbers of buy-side desktops. Beyond those systems, three third-party vendors, Eze, Charles River and Portware, are beginning to make headway in packaging their EMS and order management systems (OMS) platforms together. Expanding the field to secondary providers, Instinet and fintech firm REDI are also making gains, Greenwich added.
For example, recently Instinet added new functionality to its Newport 3 hybrid order and execution management system. The upgraded Newport OEMS new features include updates to its position management tracker. Sell-side brokers can now track and manage positions. Start-of-day files sent to Newport allow daily positions and P&L to be subsequently tracked throughout the day.
Also smaller tech vendors, such as Liquid Holdings, have entered the OEMS foray, this time in handhelds. Its latest iteration of LiquidTrade, the firm’s hybrid order- and execution-management system, now allows fund managers to facilitate multi-strategy investing in a compliant manner, while storing the firm’s full transaction history in a custody-neutral environment. Some of its new functionality includes new trade allocation methodologies, order generation that is based on the weighting of the underlying security relative to the overall portfolio (or flexible basis) and restricted lists that prohibit the trading of specific securities as set forth in the investment policy.
