The State of Play in OMS/EMS: The Need for Multi-Asset and Enhanced TCA (Strategic Focus)

Date: October 22, 2010
Pages: 37
Price:
US$ 3,995.00
Publisher: Ovum
Report type: Strategic Report
Delivery: E-mail Delivery (PDF)
ID: S1F7622C2C0EN
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The State of Play in OMS/EMS: The Need for Multi-Asset and Enhanced TCA (Strategic Focus)
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Introduction

Order management and execution management systems, or OMSs and EMSs, are trading platforms that came into existence in the equities world, where they are an established part of the infrastructure in both buy- and sell-side institutions. Indeed, OMS can be considered a mature market, in that the majority of potential customers have already had one installed for a long time.

Features and benefits
  • The report shows how liquidity continues to fragment in Europe and begins to do the same in Asia Pacific.
  • It discusses the evolution of transaction cost analysis from a compliance to an optimization tool.
  • It considers the challenges to OMS/EMS from the move to multi-asset strategies.
Highlights

The biggest and best-funded investment banks will certainly want to keep their offerings going and continue to devote development budget by adding new functionality to them, as they are an excellent means of maintaining a captive buy-side audience. Banks are, however, becoming more selective about whom they provide the systems to.The growth in popularity in multi-asset funds, and therefore the increasing number being launched in the market, is a predictable reaction to the volatility that has characterized the cash equity markets since the global financial crisis broke out in 2007.The main thrust of current legislative endeavors is intended to reduce banks’ ability to take on risk by imposing more stringent capital requirements.

Your key questions answered
  • Will OMS and EMS platforms ultimately converge into so-called OEMS that does both order and execution management?
  • What are the challenges for handling multiple asset classes from a single OMS/EMS?
  • Will transaction cost analysis be offered primarily by OMS and EMS vendors, or will the dedicated TCA vendors continue to have a role to play?

SUMMARY

Catalyst
Ovum view
Key messages
Not all customers require both an OMS and an EMS
The buy and sell sides have different requirements from an OMS
Multi-asset capability is becoming an essential feature
Transaction cost analysis needs to go deeper and wider
Compliance capabilities will grow
Integrating OMS and EMS is an opportunity for messaging vendors

INTRODUCTION: WHAT ARE OMS AND EMS?

Not all customers require both an OMS and an EMS
The buy and sell sides have different requirements from an OMS
Broker-sponsored EMSs’ force in the market tends to wane

THE ISSUES FACING OMS/EMS IN TRADE EXECUTION

Challenges require further technological development
Venue proliferation represents a challenge for EMSs to keep up with interfaces
Multi-asset capability is becoming an essential feature
Trading multiple assets and multi-asset strategies are two different things
Transaction cost analysis needs to go deeper and wider

ISSUES IN THE PRE- AND POST-TRADE ARENAS

Overview
Tougher regulation is driving change in technology
OMS/EMS will not become full risk platforms
Compliance capabilities will grow

SHOULD OMS AND EMS CONVERGE?

Ongoing debate
Some market participants do not require a full OMS and EMS
Integrating OMS and EMS is an opportunity for messaging vendors
A lot of so-called OEMSs are still two separate products

COMPETITIVE LANDSCAPE

Overview
BNY ConvergEx Group
Charles River Development
Fidessa
InfoReach
Investment Technology Group (ITG)
Linedata
List Group
Orc Software
Portware
RTS Realtime Systems (RTS)
SunGard
Trading Technologies

ULLINK

RECOMMENDATIONS

Recommendations for enterprises
Define your trading profile but bear in mind how it might change in the future
Consider how "multi-asset" you want to be
Recommendations for vendors
Help buy-side firms with TCA loopback
Prioritize OMS/EMS integration over convergence
Consider what parts of OMS/EMS could be delivered as a service
Alternative views

APPENDIX

Further reading
Methodology
Author
Ovum Consulting
Disclaimer

FIGURES

Figure: Example of how a multi-asset fund operates
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