Clare Vincent-Silk, a consultant at Investit, told FT Mandate that during discussions with a number of buy-side institutions based in the UK over readiness for the Markets in Financial Instruments Directives (MiFID) and their operational capability, a “polarity of views” was expressed over upgrading existing OMS, biting the bullet with a new EMS investment, or doing nothing.
“There are different opinions in the market on OMS and EMS uptake, and I’m curious to know if EMS is this year’s fashion, or is it something that is going to be a long-term move for buy-side firms,” stated Ms Vincent-Silk.
Most buy-side firms which Investit canvassed (the study was confined to traditional fund managers), said they were examining the matter this year.
Ms Vincent-Silk added: “While some firms have already got an EMS on board and might have implemented it across a small part of their business, they have not rolled it out across the board just yet. It all depends on the dealing profile of the buy-side firm, whether it is a high-frequency equity trading house or not.
An unnamed buy-side firm Investit spoke to recently and described as “high-up and leading edge” in best practice dealing, had evaluated both its OMS and an EMS and decided to stick with the OMS. The feeling was that an EMS was not needed.
In terms of that firm’s reasoning, Ms Vincent-Silk said: “I think they just felt that there was sufficient functionality in their
OMS to meet their requirements.” Another firm surveyed definitely said ‘no’ to an EMS, having looked at it and concluded that it was ‘not for them’.
The debate comes as some vendor firms find themselves split between going into the EMS space from the OMS space, or vice versa. Latent Zero, for example, last month announced that it now has an EMS capability within its OMS application. Other vendor firms are essentially saying they are not going in that direction, so if a buy-side firm opts for an EMS [having an OMS already] they’ll need to install an EMS.
Cost implications are not the only issue. “I think [many buy-side firms] feel there is enough functionality in their OMS already to meet their needs,” said Ms Vincent-Silk. In the case of a firm using the remodeling and rebalancing function of an OMS, an EMS would not necessarily offer this capability. However, if a firm requires the OMS for the dealing blotter function, a firm has no need for both an EMS and OMS as the EMS replaces the dealing blotter part of the OMS.
The Investit consultant stressed that firms still need to keep upgrading their OMS at “a reasonable rate” as support will eventually dry up at a certain point. Hence the need to ensure a firm’s OMS is the latest version, given that an OMS will only support a certain number of historical versions, the Investit consultant explains.
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