By Flora McFarlane.
“The order management system (OMS) and to an extent the execution management system (EMS) as stand-alone products are dead,” says John Adam, global head of product strategy at EMS provider Portware.
His assertion is that integration between the systems, a popular concept amongst asset managers, has begun in earnest.
The 2016 Greenwich Associates survey, entitled ‘Move Over, Neighbor: EMS Establishes Residency on the Desktop,’ found that easier integration with other tools was the most-requested improvement among buy-side users for OMSs and EMSs, with 54% and 41% asking for this from the respective systems. Sixty one percent of traders asked said they would prefer a comprehensive OMS/EMS platform. However, the research indicated efforts to create a fully functional OEMS have fallen short to date. That has changed says Adam.
“This week I have worked with three different clients who have a very rich, multi-line data stream going back and forth between their order and their execution management system,” he says. “Traders want to know everything about the order; brokers restrictions, who they can and can’t trade it with, underlying accounts, any limits, and whether there is a chance to internally cross that order. Any number of things that enable me to do a better job on the execution of that trade.”
This new way of handling an order allows the trader to communicate between the two channels of data in a matter of seconds or even milliseconds, enabling them to keep track of the trade and minimise the need for manual intervention.
“Any time you have a component of the trade lifecycle that kicks out into a manual process, you’re losing money, giving up cost and alpha to the market”, Adam states.
Portware has a handful of ‘early adopters’, around which it has built single workflows, able to integrate with other platforms if clients wish to keep their in-house system. Analysing the different workflows that need support through the entire lifecycle, Portware has been collaborating with Factset’s recent acquisition CYMBA, a cross-asset OMS system.
However he notes that the integration of data for fixed income O/EMS is likely to be based upon different criteria. Adam said that the markets differ significantly in that there is not as much electronic trading, which is only found in pockets, such as US Treasuries. For high yield or sovereign debt, for example, there are more likely to be smaller increases in trading volume and the value of the EMS is in the price and discovery process, more than the automation of process. For now the integration is more on the cusp in markets trading flow products.
“Like any new technology, there is an adoption lifecycle and we’re at the threshold of moving from early adopters into early majority,” he says.
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