See also The buy-side OMS, an appreciation part one...
and The buy-side OMS, an appreciation part two...
An EMS looks outwards – to allow a buy-side to trade in the markets. Typically buy-side EMS systems will have two logical interfaces – one for market data and one for orders/executions. It typically handles one or two asset classes. So traditional exchange traded productions such as equities, options, futures are generally covered by one category of EMS and traditionally non-exchange traded products such as foreign exchange and fixed income are covered by further categories of EMS. An EMS can typically be implemented on-top of an OMS in a short period of time – between two and eight weeks.
However, this model of deployment can be flawed, since restrictions on execution counterparties are not typically transmitted from OMS to EMS. So, an order may be restricted by mandate to only execute with a sub-set of brokers that are configured in the OMS. The EMS will typically come from another vendor and may not have access to the same restrictions database. There have been various solutions proposed to this – such as custom FIX messages to pass restrictions at run-time to the EMS from the OMS, re-keying of restrictions into the EMS or event driven data distribution platforms to pass restriction data in real-time to the EMS. All of these models have flaws. This lack of integration will be covered in a future blog post [updated - Buy-side trading: OMS and EMS integration]
The recent legislative changes of Dodd-Frank and suchlike do mean that some traditionally non-exchange traded products are now moving to trade on Swaps Execution Facilities (SEFs). Since a SEF looks rather like an exchange there is an interesting cross-fertilisation of traditional exchange traded technology solutions into the traditionally non-exchange traded technology arena.
In a typical large multi-asset class buy-side there will usually be one OMS connected to many EMS platforms. So an instance of an OMS such as Thinkfolio, Charles River or LatentZero will connect to
- Tradeweb, Bloomberg, Bondvision and MarketAxess for Fixed Income RFQ based trading
- FXAll and FXConnect for Streaming and RFQ based trading
- Portware and/or Flextrade and/or ITG Triton for equity order based workflow for single stock (including desk order flow, DMA and algorithmic trading) and program trades
- RFQ-Hub to connect to firms to get quotes on big ETF trades
So how do you get this all working in a robust, reliable, low-cost manner?