The sellside needs to step up its game if it wants to compete in provision of order management systems (OMS) from independent vendors.
That’s the opinion of Tabb Group, who via SunGard, a technology provider (including OMSs), has released a new research report that reveals both large and small investment banks and brokers are sacrificing OMS functionality in exchange for aggressive cost cutting. Brokers have been cutting costs in recent years thanks to the drop in U.S. equity commissions over the last five years, which has also included staff.
“To continue proving their worth to the buy side, sellside firms must recognize the increasingly urgent need for deployment of OMS technology capable of more than simple execution of individual assets. Today’s more complex environment requires the technological infrastructure for global multi-asset trading, compliance management, and the ability to assess client profitability,” said Alexander Tabb, partner at Tabb.
This is coming at a time when firms’ top initiatives over the next 12 to 24 months will focus on OMS and execution management systems (EMSs) to protect and grow their business revenues, Tabb added.
The TABB report, “The Transformative OMS: From Tickets & Timestamps to Today’s Technologies,” is based on responses from 111 individuals via surveys and interviews from a broad range of brokerage firms and investment banks across North America, Europe and Asia. The key findings of the report, commissioned by SunGard, include the following:
– Top-of-mind for all sell-side firms is the desire to consolidate OMS functionality across all asset classes
– Current OMS functionality for futures, foreign exchange (FX) and fixed income exhibited a significant decline in satisfaction when compared to that of cash equities
– For a large number of smaller firms, current OMS functionality is focused only on equity execution
– In addition to maintaining at least one OMS, many sell-side firms report using an EMS (in some cases, several) to offset limitations in OMS capabilities
In specific categories, such as performance tracking and profitability monitoring, those “not satisfied” spiked to nearly 50 percent of respondents.
In light of varying levels of satisfaction, total cost of ownership (TCO) plays an outsized role in deciding to remain with a sub-optimal OMS versus migrating to a different platform
