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Fixed Income Trading: New venues

A simple question came up recently in a conversation – how many new Fixed Income trading venues are there?  I could not think of anywhere th...

Monday, 2 May 2016

EMS: Consolidation?

Time to return to a favourite topic of this blog - the Execution Management System.  It's a market sector that looks set for some pretty drastic changes with the impact of MIFID2 and continued reduction in execution commissions impacting adversely...
So which firms are in this market and what's the position?

Eze Software
A firm that has been formed by a mixture of organic growth of the Eze OMS and acquisition of Tradar and Real Tick. The firm was owned by Convergex and then taken private by TPG.
Coverage: Equities (single stock, DMA, Algo, PT), F&O
 
September 2015 saw Factset acquire Portware for $265m in cash. That's a pretty hefty fee for a business in a very competitive market.
Coverage: Equities (single stock, DMA, Algo, PT), FX spot, F&O
 
ITG and their Triton product face a difficult future which is not related to Triton, rather to "Project Omega".  A sad story, especially for the many dedicated ITG folks I have met and worked with over the years who have really pushed the agency brokerage and technology provider model.
Coverage: Equities (single stock, DMA, Algo, PT), F&O (limited)

Their Execta platform is a good looking piece of software.  A privately held company with a seemingly US centric client-list.
Coverage: Equities (single stock, DMA, Algo, PT), F&O
 
They have performed well due to strong protection of their IP portfolio.  A quick online search for "trading technologies lawsuit" brings about 145,000 hits.  So best not to say much about this firm.

Bloomberg EMSX has been going great guns for some time due to the nature of their "free to the buy-side" charging model.
Coverage: Equities (single stock, DMA, Algo, PT), F&O

The firm has branched out successfully over the last few years by an astute combination of acquisition of buy-side vendor LatentZero (several years later than I recommended) and organic growth in partnership with a series of tier one and tier two banks. 
Coverage: Equities (single stock, DMA, Algo, PT), F&O

A firm that has recently been acquired, Sungard is something of a mixed bad of acquisitions which have not all been integrated successfully.  It will be interesting to see how the acquisition plays out in terms of product line consolidation and cost cutting.
 
Privately held New York based firm with operations in London, Singapore and other centres.  They have some interesting clients and a product offering that includes a number of asset classes.
Coverage: Equities (single stock, DMA, Algo, PT), F&O, FX Spot 
 
The ex-Goldman Sachs Redi-plus which was a rebadged Spear, Leeds Kellogg product has been re-positioned as a fintech start-up rolled out of GS. 
 
The firm has proliferated into the trading venue market with Galaxy, their offering to fulfil the requirements from the Cassiopeia Bonds requirements.
Coverage: Equities (single stock, DMA, Algo, PT), F&O, FX Spot 
 
As we move to a multi-asset trading environment, should a list of EMS platforms now include MarketAxess, Tradeweb, FXAll, 360T and so on?
 
My view is that execution must be viewed holistically with proper analytics for all asset classes. As such, this post will be amended in future (time permitting) to include all execution management systems in broad use over all asset classes that are traded electronically at this time.
 
As we can see with "Fixed Income Trading: New venues" this is a fast moving world.
 
[Edit: 2nd May 2016]

The above list covers most of the conventional EMS platforms that would be named by most folks if asked for a list.  But as the marketplace is increasing in complexity so I've amended this post to add on some non-traditional providers...

ThomsonReuters
Some rumours about them making an acquisition in this space having missed out on Portware. Je ne sais pas...

Already acquired FXAll which they have been integrating with their existing product set.  If ThomsonReuters could partner up with a modern technology OMS/EMS they could be the category killer.

IRESS
Although they are an Australian firm without a real footprint in the EMEA institutional space, they are the 800lb gorilla in the Australian Equity market and through their acquisition of Proquote and the LSE FIX Hub they could be a contender. All depends on whether they are willing to invest in the product and develop code outside of Australia.

Deutsche Boerse
Obviously an exchange but they bought 360T and could yet end up owning the LSE which includes MTS and other Fixed Income assets as well as the Equities Exchange.  Could be a contender if they can spend a lot of time and effort in a clean-up and consolidation, removing duplication and strengthening the core IP and value propositions. If the Deutsche Boerse acquisition does not go ahead then LSE could be on here. 

Tradeweb
They have proliferated from US rates into credit, CDS, FX options, equity options, money markets, ETFs and have acquired a number of firms along the way. If the ownership was rolled into ThomsonReuters rather than the Project Fusion banks they could use their foothold due to Fixed Income trading to enter other markets.

MarketAxess
A $4.5bn market capitalisation with heritage in credit.  They have proliferated into munis, high yield, EM, Fixed Income ETFs and other categories but remain quite focussed.

Citadel Technology
The technology business of Citadel.  They keep a low profile but were working with Redi on an OEMS which received coverage in Waters Technology.


 
To be continued...
 

2 comments:

  1. You've missed out Infront from this list. They're the leading player in the Nordics and are now expanding across Europe. They're a full market data platform as well as EMS and they provide trading solutions to several exchanges and institutions across Northern and Eastern Europe.

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  2. I've had the pleasure of meeting several people from Infront, seen a demonstration and talked about what they are doing. Based on that, at the time (early 2016) I categorised Infront as a market data system with some limited order execution capabilities. If that has changed and it's moving more into a true EMS space then I would be happy to add them to this list...

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