Traders don’t care. They don’t care about the semantics of the Order Management System/Execution Management System (OMS/EMS) debate. They don’t care about proper definitions. They don’t care what the trading system in front of them is called. They only care that it gets the job done.
There has been an unbelievable amount of chatter recently about the need for, the difference between and the potential convergence of OMS and EMS solutions. As often happens in the financial industry, a reliance on punchy acronyms only seems to have created more confusion. Sometimes, in our scramble to create a category, we forego the importance of remembering the core requirements that led to the creation of that category in the first place.
The buy-side is experiencing a significant increase in pressure to better manage the entire front-to-back workflow of the investment process. Trading desks in particular, are faced with rising expectations to increase their capacity and capabilities. Today, a trader is expected to focus on how best to capture expected alpha and/or minimise impact over potentially thousands of securities, each with unique benchmarks, characteristics and expectations. Automation and scalability combined with real-time analytics and market access are all crucial to achieving this. Having these tools at the trader’s fingertips and all contained within a single system, no matter what it might be called, is of utmost importance.
The reality of today’s trading environment dictates that disparate technologies are no longer conducive to effective or efficient trading. There exists an abundance of tools and technologies today, both proprietary and vendor-supplied, explicitly designed to help the trader better do their job. While these advances are welcome, they often times present a problem of a segregated workflow. The key is to find a central trading system that easily ties all these tools together in a robust, easily accessible environment.
The only way to achieve this is by implementing a system that is inherently flexible in its design, allowing for easy integration into a trader’s current environment while greatly minimising the impact on a trader’s workflow. A system predicated on an open architecture, one extremely adaptable to technological shifts and changes, that can easily integrate with third-party offerings such as direct market access (DMA), algorithms, IOIs, crossing networks and real-time transaction cost analysis (TCA) tools is the panacea for today’s trader.
Next-generation trading systems also need to contain the ability to aggregate data from multiple sources, including pre-trade analytics, risk, portfolio optimisation, reference data, market data, research and news. By doing so, traders are better able to address the varying needs of different trading disciplines, all within the same system and in co-ordination with one another.
Audits and controls are also crucial components for a core, centralised trading system. To adhere to more stringent regulatory requirements, as well as for the sake of greater efficiency, trading systems today are required to audit the entire lifecycle of the trade. A complete snapshot of the market must be taken at key points through the entire cycle to conduct proper trade analysis, and this can best be achieved through a singular, interconnected trade infrastructure. Within this infrastructure, managers need the ability to place controls and restrictions, on a very finite level, across the entire enterprise to better control their trading.
Of course, the need to capture and store all this information also leads to concerns about scalability. For this reason, many legacy systems are unable to meet current demands and increasing volumes of data for both analytic and regulatory purposes. Additionally, more than ever before, today’s trading environment requires a system that can keep up with the high-speed requirements of the modern trader. The increasing reliance on algorithmic trading makes speed and capacity capabilities exponentially more important.
Sometimes, in the rush to provide advances in speed, scalability and a robust infrastructure, the things that matter most to the trader are often forgotten. Traders want tailored solutions that allow them to work from an environment they are most comfortable with. That doesn’t only mean that they can customise a trade blotter, it also means they can easily implement custom alerts or turn what was previously a multi-step manual process into a single-step automated function. This allows a trader to spend the bulk of their time focused on the market generating trade ideas rather than slogging through menial but necessary tasks. Vendors today need to be conscious of this so they can provide a system flexible enough to allow traders to easily create a tailored trading environment that works best for them.
The key is to stop focusing on the definitions of OMS and EMS. It’s clear that these systems will have to co-exist in one fashion or another and eventually become something else altogether. There is a higher evolution of trading system that the industry is striving for, one which goes far beyond anything those systems can do on their own.
And besides, traders don’t care what you call it. They just know they need it.
In association with Portware.
Portware develops and sells multi-asset, automated and algorithmic trading software and solutions to the global securities marketplace. As the only wholly independent execution and order management trading systems provider, Portware supplies traders with true broker-neutral solutions to facilitate best execution. Portware’s event-driven, multi-threaded architecture has quickly become the market standard for high-frequency trading. Since the company’s launch in 2000, Portware solutions have been implemented at more than 100 firms worldwide.
