ELS panelists say OMS innovation is slow; EMS innovation will be user-led.
Order management systems and execution management systems are on every trading desk, and providers of the interfaces are being asked for more innovation to keep pace with an evolving marketplace.
Innovation is more prevalent with EMSs than with OMSs, which has been a more static business, speakers indicated on the The Latest Innovations in OMS/EMS to Achieve More Efficient Workflows panel Wednesday morning at Equity Leaders Summit in Miami.
Sean Paylor, Vice President of Trading and Implementation at Acadian Asset Management, said when choosing an OMS or EMS, his firm assesses factors such as which asset classes will be traded, what data and other resources are available, and can the systems support Acadian’s daily trading needs as well as customization requirements.
“It comes down to what do you need now, what you could need in future, and is there that flexibility” to bridge the present and future, Paylor said.
Medan Gabbay, Chief Revenue Officer at technology provider Quod Financial, said “the industry is led by cost savings,” and at least for OMSs, cost is the first consideration, followed by capability for innovation.
Gabbay said the industry’s perception of an OMS as a “glorified Excel spreadsheet” is changing as trading desks automate, but obstacles to innovation remain. “People have low expectations of OMS providers. The industry has been stagnant,” Gabbay said.
Panelists noted that the cost and pain of changing OMSs, gives the product a stickiness that limits providers’ incentive to innovate, and sometimes service levels don’t match up with what was promised at point of sale. “You have to push OMS providers to get what you need,” said Whitney Wineroth, Director of Trading Technology at Artisan Partners.
What would prompt an institutional firm to find a new OMS or EMS? “You may want to do more sophisticated things” that the incumbent system doesn’t support, said Robert Watts, Director, Strategy and Product Management, Trading Solutions at FactSet. “Traders’ roles are changing, and multi-asset trading needs support. There may be ambitions around automation and efficiency on the desk. Each of those can trigger the ambition to change.”
Watts said OMS/EMS innovation starts with a trading/investing firm understanding its market and its market challenges via rigorous engagement with the client base. “If you engage with your client base you can identify key things that you want, and clients will get behind that strategy,” Watts said.
The EMS, as the central ecosystem for traders, absorbs innovation from multiple sides, including, increasingly, EMS users themselves.
“The most impactful change over the past couple years was the concept of self service,” Gabbay said, referring to the process of building interfaces that non-coder individuals can change and customize. “Having that level of interaction with your application is enabling the real innovators: the buy side.”
Watts highlighted this empowerment as a future trend. “The buy side is going to be more in charge of an order’s destination’s by using the EMS to help determine where order ends up,” he said. “There will be a liquidity discovery within the EMS that they have not previously had.”
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