The crux of the matter is that the buy-side OMS integration with a compliance system is based on an interactive model - that a dealer clicking on buttons forces the compliance engine to execute commands to establish if an order can be released to a specific broker.
So let's imagine a scenario:
- Buy-side dealer attempts to release an order to broker X
- Compliance engine says no, cannot trade with broker X.
- Buy-side dealer picks another broker.
- Compliance engine says yes, you can trade with broker Y.
- Broker Y receives order and executes, all good.
- Buy-side dealer attempts to release an order to broker X via an EMS
- Compliance engine says yes, can trade with "broker EMS" since the EMS is configured like a broker in the buy-side OMS.
- In the EMS the buy-side dealer attempts to release an order to broker X
- No compliance engine in the EMS, so broker X receives order and executes
- Later on compliance breach team and mandate management team kick off an investigation about why a dealer executed for this portfolio with broker X when it's clearly not allowed.
Answer - either work around this OR build a proper multi-asset class OMS and EMS combined with access to a single version of the truth.
Conclusion: When you are at the search and selection stage for an EMS - ask your EMS provider to read this post and ask them to say how exactly they avoid this issue.
Note: If their answer involves the words "infrequent", "FTP", "manual process" or "phase two deliverable" my polite advice is run for the hills...