- Research identifies need for specialised and sophisticated systems
- New regulation, increased HFT and required efficiency shape vendor offerings
GreySpark Partners, the capital markets consultancy, has published a new industry report after developing a detailed comparative analysis of Order Management Systems (OMSs) and Execution Management Systems (EMSs) on the market. The research looks at solutions that are available for Sellside use.
EMSs are used by brokers and dealers to access electronic markets and achieve the best executions for their clients, in combination with advanced, automated trading strategies. They incorporate flexible and sophisticated tools, such as transaction cost analysis (TCA), to assess execution performance. OMSs are designed to manage and consolidate client order flows for securities and listed derivatives orders. These systems provide pre-trade checks, verifying if a trade input complies with client credit lines and collateral requirements.
As well as reviewing the vendor solutions available, GreySpark’s research identifies that OMS and EMS offerings evolve under various constraints arising from efficiency pressures, growth in trading volume, the need for trading quality to be constantly improved, as well the continuous trade-off between sophistication and usability. The research has come at a time that the new regulatory environment, such as the Dodd-Frank in the US and review of Markets in Financial Instruments Directive (MiFID) in Europe, have brought in heightened transparency requirements and operational controls. The research is also timely as a need for a reassessment of OMSs and EMSs partly arises from the rising prevalence of High Frequency Trading (HFT), which requires a higher degree of automation and performance.
“The new regulatory environment, a need for enhanced sophistication and usability, along with a rise in HFT has increased the need for greater efficiency in sell-side flow businesses, with an emphasis on speed, scalability and execution quality,” said Frederic Ponzo, managing partner, GreySpark Partners, who led the research. “Given these pressures that are being placed on this by the Sellside, we sought to provide a clear overview of what is available to them in terms of order and execution management systems, and hybrid systems that combine features of both.”
The report analyses solutions from 12 vendors, assessing equities and listed derivatives OMS and EMS solutions across several geographical locations. A high-level view of the competitive landscape is accomplished by comparison of solutions across the market, followed by individual scorecards.