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Asia and Latin America News Network focusing on Financial Markets, Energy, Environment, Commodity and Risk, Trading and Data Management

Brazil: TRADING SCREEN launches OMS, THOMSON REUTERS offers Elektron Hosting

TradingScreen Inc. launches TradePlus, its order management system (OMS) for the sell side in Brazil.

TradePlus, which will be available globally later this month, integrates all trading infrastructure required by broker dealers through a no-install Software-as-a-Service model.

TradingScreen’s TradePlus clients will benefit from an exchange co-located in a local datacenter and an office in Brazil, which ensures low-latency and the industry leading follow-the-sun support that TradingScreen is known for. TradePlus has seamless integration into the world’s leading execution management system (EMS) for the buy side, TradingScreen’s TradeSmart, ensuring a new level of communication between brokers and their clients.

“Sell-side firms looking to buy an OMS face significant challenges when trying to find a system that will integrate with their buy-side customers,” said TradingScreen CEO Philippe Buhannic. “TradingScreen’s TradePlus provides a significant advantage, because there is integration between both sides right out of the box.”

TradePlus covers the entire workflow from liquidity management, order management, book passing, warehousing, sophisticated trading tools, an algo development environment, allocation management and supports a full integration to local back office and middle office systems while leveraging the TradeNet network distribution capability.

“TradePlus offers an innovative set of hosted exchange links and risk and compliance features that insure a new level of control in a high-volume trading environment. TradePlus also provides a highly sophisticated and efficient method for trading the Brazilian equity and listed derivatives markets, while allowing brokers to give their clients the best EMS in the market,” said Jose Barrera, Director of TradingScreen’s Sao Paulo office. “TradingScreen has the largest number of deployed EMS screens globally, and a deep understanding of the market in Brazil. With this foundation beneath it, TradePlus is the right product at the right place and the right time.”

Thomson Reuters launches  Elektron hosting and managed services in Brazil.

The new service, situated in close proximity to the BM&F BOVESPA exchange, will provide trading firms with cost effective, low latency access to the real-time data required to fuel algorithmic and high-frequency trading strategies in Brazil.

Based in São Paulo, the new Elektron data solution delivers high speed connectivity to BM&F BOVESPA for market participants seeking local liquidity in Brazil, including full depth of market pricing along with US-traded American Depository Receipts (ADRs) and CME futures data. By accessing the Elektron services, either through cross-connecting applications within the data centre or externally through a choice of connectivity options, local firms can consume both low latency local market content as well as global, cross-asset real-time data from over 350 electronic venues and hundreds of OTC market contributors and reference data sources.

Investor interest in the fast-growing Brazilian market has increased rapidly in recent years, driving market liquidity and seeing an expanding number of domestic and international firms adopting algorithmic trading. Elektron Hosting and Managed Services provides the comprehensive, high-quality, real-time data and high-performance delivery required to support these trading strategies and help customers gain competitive advantage.

Mike Powell, managing director, Elektron Hosting and Managed Services, Thomson Reuters, said: “The launch of Elektron in Brazil is a natural extension of our established business in the country and supports our customers’ evolving requirements. With Elektron, we continue to bring together global market participants and deliver world-class content that further empowers these communities. We are delighted to be working with BM&F BOVESPA in Brazil to address the requirements of our collective clients for high-performance, cost-efficient data solutions.”

MondoVisione, 24.04.2012

Filed under: BM&FBOVESPA, Brazil, Exchanges, , , , , , , , , , , , , , ,

Fidessa on Latam Trading – Opportunities and Challenges

Electronic trading in Latin America continues to be a hot subject, with action moving beyond Brazil to other countries. Low-Latency.comspoke to Fidessa’s head of business development for the region, Alice Botis, to get an update, and a handle on low-latency initiatives in the marketplace.

Q: Can you start by some scene setting – where is the electronic trading action in the Latam market?

A: Electronic trading is already well established in ;Brazil, Mexico and Chile, and with the introduction of MILA, both Colombia and Peru have also adopted FIX order routing. Colombia has not yet opened their market to allow FIX connectivity to third-party network providers, but they are looking forward to making that available in 2012-2013.

In Peru, the decision to make FIX connectivity available to third-party network providers is still pending regulatory approval, but if approved, they expect implementation to move swiftly.

Buy-sides in Latin America have been slow to adopt electronic order routing, but where they have, they often still pick up the phone to have a conversation with the trader for local colour. But, by having electronic connectivity, the sell-side is able to enter the order into their OMS and send unsolicited notices of execution back to the client which minimises manual errors.

The move toward the adoption of electronic order routing in Latin America is significantly driven by the desire to attract international order flow and to make trading in Latin America as seamless as trading in other mature markets.

Q: Where does Fidessa have operations, and connectivity? What’s the latest news on that front?

A: Fidessa recently opened an office in Sao Paulo to serve our clients in Latin America, including Mexico. The office was opened to provide on-the-ground technical and production support to our local clients. Our plan is to continue building out the appropriate infrastructure to offer data centre hosting, hosted services such as a local ticker plant and a local network hub to facilitate North, South and local order routing and execution. We will also be hiring local staff to ensure support in both Spanish and Portuguese.

We currently have 21 receiving brokers in Latin America concentrated in Brazil, Mexico, Chile and Colombia, and we are in discussions with several others in the region to join the Fidessa network.

Q: What are the infrastructure challenges of working in Latam?

A: The greatest infrastructure challenges are being seen by international players looking to gain access to the local markets. There are many challenges, such as hardware and telecom acquisition, so they seek the expertise of local brokers, custodians and technology vendors to help them put the appropriate infrastructure in place to start trading.

It is important to understand the workflow the client is looking to facilitate to assure a balance of cost and speed. As demand in the region continues to increase, things will only get easier, and we can hope, with scale, less expensive.

Q: Focusing on Brazil, it looks like competition is heating up there with Bats and Direct Edge planning to take on BM&FBOVESPA. What opportunities does this open up for Fidessa?

A: With the introduction of fragmentation comes the increased responsibility for brokers to provide best execution to their clients. In some markets, the exchanges themselves will be mandated to provide aggregated quote data and routing to the best price, but even in these markets, brokers will compete for business by aggregating the data feeds and connecting directly to each market themselves to more quickly identify and access best price and volume.

Whether you are an international player who has experienced fragmentation in other markets or a local player who has never had to overcome this challenge before, there will be a significant investment in time and money to accommodate the data feed, connectivity and smart order routing requirements. Working with experienced vendors in other markets like Fidessa, who has worked with Bats and Direct Edge, can provide a time to market and cost advantage to implementing the required technology and infrastructure.

Q: Are Latam markets looking to invest in low-latency technologies and offerings in a similar way that markets in North America and Europe have? Is this ‘me too’ or are they learning from others’ experience and doing things differently?

A: Brazil, Mexico and Chile have all made significant investments in their exchange technology to provide lower latency, higher throughput execution for their participants, setting the stage for algorithmic and HFT participation in their market. Brazil is leveraging the experience and expertise of the CME by partnering with them for the implementation of their new multi asset trading engine. Chile has extended their proprietary technology along with partnerships with technology providers like IBM for their low-latency messaging, and Mexico ;is enhancing their proprietary technology to provide significant improvements to latency and throughput.

Brazil has seen the highest rate of clients seeking to set up local infrastructure to facilitate low-latency market access for algorithmic and HFT participation. But, there is a delicate balance that firms are trying to find between investment in low-latency technology and return on investment on that technology purchase. That said, the amount of high frequency trading participation in the region as a whole is still growing, so as volume continues to increase, so might the returns on those technology investments.

Q: What about regulatory oversight for all of these developments? Is there a MiFID in the works for Latam?

A: There is not currently a regional regulation such as MiFID or Regulation NMS for best execution in place because Latin America is not yet fragmented. However, each country does have its own regulatory rules in place to oversee the various different types of order flow and assure quality execution for retail transactions.

In Chile, for example, there are three exchanges that are not electronically linked. The brokers are not obligated to provide best price. As long as they demonstrate they are trading on the primary exchange, and provide the best price along with the executed price on the confirmation, they are in compliance with the local rules.

As fragmentation is undoubtedly coming to LatAm, I do believe you will see local regulators augment their current rules to protect their market participants.

Q: What do you expect to be some other specific developments in the coming year in Latam, for the markets and for Fidessa?

A: As far as market changes that might affect the region, the potential addition of Mexico to the Integrated Latin American Market (MILA) will certainly affect the development of the region. Mexico has already signed a letter of intent to join MILA, and if they do, it will further drive connectivity in the region and the need for trading systems to manage higher volumes and provide multi-regional orders and execution capabilities.

The region is very dynamic with growth, change and investment, and we are excited to be working with partners in the region who are driving the extension of our trading services to accommodate their growth and success.

Source: Low Latenency, 08.02.2012

Filed under: BM&FBOVESPA, BMV - Mexico, Brazil, Chile, Colombia, FIX Connectivity, Latin America, Mexico, Peru, Trading Technology, , , , , , , , , , , , , , , , , , , , ,

Charles River IMS gets upgrade

Charles River Development (Charles River), a front- and middle-office software solutions provider for investment firms, today announced the release of Version 9.1 of the Charles River Investment Management System (Charles River IMS).

This production release, which completes Charles River’s transition to a service-oriented architecture (SOA), fully integrates order and execution management capabilities (OEMS) in a single platform. Version 9.1 supports high-volume wealth management accounts, and introduces a new module for performance measurement, attribution, and performance risk analysis (PMAR). The system’s real-time, event-driven trader blotter and new user interface streamline application workflows and improve the user experience.

According to President and CEO Peter Lambertus, more than 25 clients participated in the beta program and validated that Version 9.1 delivers critical functionality such as execution management, increased support for wealth management, fixed income and derivatives instruments and analytics. “Version 9.1 is the only single, consolidated platform that provides complete order and execution management and PMAR. Our first client is already live on Version 9.1, leveraging the system’s wealth management capabilities as well as Charles River Anywhere’s remote order routing functionality.”

Advanced wealth management capabilities support large volumes of complex managed account products, including SMAs, UMAs, UMHs, and discretionary managed portfolios. Portfolio managers and financial advisors can construct and rebalance portfolios and ensure tax optimization across single accounts, multi-sleeve accounts and households. The Charles River Anywhere Web-based workstation provides tools for remote account and position monitoring, order generation, trading and report viewing.

Version 9.1’s integrated advanced execution management functionality delivers improved workflow and audit controls compared to third-party execution management system alternatives. From a single desktop, users can access: algorithmic and program trading; real-time data; watch lists and integrated news; integrated pre- and post-trade transaction cost analysis; trade analytics; direct market access; automated smart order routing; and extensive customization options.

Available as a stand-alone module or as part of the Charles River IMS suite, Charles River Performance enables users to calculate, analyze and report on multi-asset and multi currency performance measurement, equity and fixed income attribution, and a variety of performance risk measures – across portfolios, indexes, benchmarks and GIPS (Global Investment Performance Standards) composites.

Other key Version 9.1 enhancements include: new and expanded support for IRS/CDS Swaptions, CDS/TRS Baskets and other derivatives; advanced trading analytics for real-time implementation shortfall monitoring; enhanced futures roll capabilities; new support for volatility surfaces and enhanced swap curve construction features; FX pair-based internal crossing; as well as new functionality for reviewing compliance ‘as of’ any historical date.

Source: FINEXTRA, 07.01.2010

Filed under: News, Risk Management, Trading Technology, , , , , ,

CMA launches Latin America algo trading offering

CMA the leading Market Data, Order Management and Connectivity provider in Brazil has officially launched CMA Algoritmos onto its Trade Hub platform.

CMA can now provide algorithmic trading as a part of its portfolio of leading LatAm capital markets services and applications. CMA product offerings are currently in use throughout Latin America by over 17,000 workstations, 75 brokers with access to over 100 global exchanges.

CMA Algoritmos is a sophisticated suite of solutions particularly designed for and by the Brazilian trading market with uses throughout Latin American, Europe and North America. The user simply defines trading strategies, customizes triggers while being able to utilize many common methodologies such as SpreadMaker, VWAP, TWAP, QuickBasket, Best Offer, Volume Tracker and Financial Summary as a few examples.

CMA has enabled Algoritmos onto CMA Trade Hub, the largest network of services and applications utilizing all versions of FIX in Latin America, so that any interested trading party Buy-Side or Sell- Side in North America, Europe or beyond would have instantaneous access to broker dealers for execution.

The CMA services and applications on Trade Hub are utilized by more than 17,000 workstations from 60 brokers and many of their clients in Brazil as well as 15 other brokers and their clients throughout: Argentina, Chile, Peru, Colombia, Mexico and Spain. The addition of Algoritmos makes trading Equities, Futures, Options and Foreign eXchange in Latin American Capital Markets even more lucrative.

Source: FINEXTRA, 23.11.2009

Filed under: Argentina, BM&FBOVESPA, BMV - Mexico, Brazil, Chile, Colombia, Exchanges, FIX Connectivity, Latin America, Mexico, News, Peru, Trading Technology, , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Fidessa expands connectivity network with nine new Latin American brokers in Mexico and Brazil

Fidessa group plc, provider of award-winning trading solutions for the buy-side and sell-side, today announced the addition of nine brokerage firms, with operations in Brazil and Mexico, to its global connectivity network. This extends the range of order execution opportunities for firms looking to access the Latin America (LATAM) markets.

BES Securities, Credit Suisse Hedging-Griffo, Fator Securities, Grupo Bursatil Mexicano, ICAP Brazil CTVM, Interacciones Casa de Bolsa, Itau Securities, IXE Casa de Bolsa and XP Investimentos are now all available on Fidessa’s network, and join previously announced LATAM firms including Planner Corretora De Valores and Casa de Bolsa Finamex.

Access to these brokers’ services is available via direct FIX connection or fully integrated into Fidessa’s own products – including the Minerva OEMS and EMS Workstation for the buy-side, and its sell-side trading platform solutions.

Martin Hakker, EVP marketing at Fidessa comments: “We’re committed to expanding our global network to provide the broadest possible range of execution services on a global basis. We’re seeing increased demand in the LATAM region from both buy-side and sell-side firms as institutions in the region continue to embrace electronic trading technologies and international firms look to the region to expand the trading and execution services they can offer their clients.”

Hakker adds: “Having joined Fidessa’s network, these brokerage firms are now able to offer their market-leading DMA, care, and algorithmic trading solutions to both the buy-side and sell-side via one of the largest trading networks in the industry.”

Fidessa’s connectivity network links over 2,300 buy-side institutions to more than 400 brokers and 120 markets around the world, providing a “one-stop-shop” for best execution services. Fidessa group serves around 24,000 users across more than 730 clients around the world and are used by more than 85 per cent of tier-one financial institutions.

Source: Fidessa, 03.11.2009

Filed under: Brazil, Exchanges, FIX Connectivity, Latin America, Mexico, News, Trading Technology, , , , , , , , , , , , , , , , , , , , , , ,

在2009中国基金论坛与Charles River相会 Invitation to 3rd Fund Forum China on 21st by Charles River

Charles River Development 高兴地宣布我们将参加2009102122日在上海万豪虹桥大酒店举行的2009年第三届中国基金论坛。

请在大会期间参观Charles River的展位以了解Charles River投资管理系统(Charles River IMS) 。请留下您的名片以获得赢取一台iPod的机会!
此处 <> 查看完整的会议议程。 3rd Fund Forum China 21-22nd October 2009

Charles River IMS是一种全方位的软件套件,旨在满足中国投资经理的复杂及不断变化的需求。Charles River IMS全面支持中文,并具有对超过35种以上的国内证券类型以及相关工作流程的支持。客户可应用此系统进行交易,执行以及对复杂的国内和国际资产类别,组合及条规进行管理。系统也通过与一家国内普遍使用的交易系统的双向实时接口提供对国内交易所的直接连接。随信所附的是Charles River IMS(9)的主要新增功能的简单概括以供您参

Mark McBurnie
+61 400 016 188 <>

Filed under: China, Events, Services, , , , , , , , ,

Charles River Development Expands Global Reach with Beijing Office / 拓展全球业务 – 建立北京办事处

Charles River Development (Charles River), a front- and middle-office software solutions provider for investment firms, today announced the expansion of its global operations with a regional office in Beijing, China. Located in the Excel Centre in the Financial Street area of Beijing, the office is staffed with experienced Charles River employees and multi-lingual Chinese nationals who provide China-based investment managers with professional implementation, consulting and support services. Charles River’s client base in China includes China Life Asset Management Company, the country’s largest institutional investor.

“The opportunity to invest in international securities has increased Chinese asset managers’ demand for front- to middle-office systems that can support complex investment strategies including domestic Chinese instruments, products and workflows,” said Tom Driscoll, Managing Director, Global, Charles River Development. “The Charles River Investment Management System (Charles River IMS) can address any specific regulation, asset class, trading or language requirements our Chinese clients might have.”

Charles River IMS is available with full Chinese language capability and supports over 35 Chinese security types and associated workflows. Clients can use the system to trade, execute and manage complex Chinese domestic and international asset classes, portfolios and regulations. The system also offers direct Chinese exchange connectivity via a bi-directional real time interface to a widely-used domestic trading platform.

“Charles River has always grown its business organically,” said Cameron Field, Managing Director, Asia Pacific, Charles River Development. “We build local teams of Charles River experts who understand the local investment management market, language and culture. These teams support our clients from local offices. And we make a significant investment to localizing our solutions. For the past three years we’ve taken this approach in China.”

Continues Field, “We are pleased to be the first global investment management solutions provider in China, and are continually enhancing our local solution. Charles River is currently working on a number of strategic initiatives with key market bodies and closely monitoring how the adoption of NGTS and the STEP Protocol will enhance connectivity, data integration and STP for Chinese clients.”

一家向投资公司提供前台和中台软件及方案的供应商), 今天宣布在中国北京建立办事处以扩展其全球运营。北京办事处设于金融街的卓著中心,配备富有经验的Charles River员工及通晓多国语言的大陆员工,以向大陆投资管理公司提供专业的项目实施,咨询及支援服务。Charles River在中国的客户包括中国最大的机构投资者 – 中国人寿资产管理公司。

“投资于国际资产使得中国的资产管理公司对前台和中台系统的需求增加,而这些系统必须支持复杂的投资策略其中包括中国国内资产,产品及工作流程。” Charles River Development全球董事总经理Tom Driscoll说。“Charles River Investment Management System (Charles River IMS)可以支持我们的中国客户可能需要的任何条规,资产类别,交易及语言方面的需求。“

Charles River IMS具有全面的中文功能,并支持35种以上的国内证券类型及相关的工作流程。客户可使用Charles River IMS进行交易,执行以及管理复杂的国内及国际资产类别,组合及条规。系统也通过与一家国内普遍使用的交易平台的双向实时接口提供对国内交易所的直接连接。

“Charles River一直以来都是在有计划地拓展自己的业务,“Charles River Development亚太地区董事总经理Cameron Field说。“我们建立了解当地投资管理市场,语言及文化的富有经验的本地团队。这些团队从当地办事处支援我们的客户。而且我们投入可观的投资以使我们的方案本地化。在过去的三年里我们在中国一直是这样做的。“

他接着说,”我们非常高兴我们成为首家进入中国的全球投资管理方案提供厂商,并会继续增强我们的本地化方案 。Charles River目前正与主要市场机构联系并正在进行一些战略措施,我们也在关注新一代交易系统以及STEP的采用将会如何使中国客户的连接性,数据集成以及直通式处理的功能增强。

Source: Charles River, 13.10.2009

Filed under: Asia, China, Data Management, News, Risk Management, Trading Technology, , , , , , , , , , , , , ,

TradingScreen launches TradeSmart X

New York, London, Hong Kong, Tokyo -September 23, 2009-  TradingScreen, Inc. (“TradingScreen”), the global leader in Execution Management Systems (EMS) announced today that TradeSmart X, the next generation version of its multi-broker multi-asset class flagship front-end will be showcased at the TradingScreen Tenth Year Anniversary Party on Thursday September 24th at the New York Nasdaq MarketSite and made available for release on September 25th.

TradeSmart X has been designed to provide a more intuitive and richer user experience. The new TradeSmart X integrates into a single interface major functionality enhancements for liquidity access; execution management; cross-asset class trading and reporting delivered with a new look and feel.

“TradeSmart X follows TradingScreen’s commitment to providing open, innovative and easily deployable trading solutions.  We have worked very hard at rethinking the trading interface concept and designed a product capable of meeting the ever growing challenges of liquidity fragmentation, strategy trading, low latency and workflow integration faced by traders today. TradeSmart X redefines the user experience through a complete modularization of the application, improved usability and offers a functionality to integrate the client’s own proprietary applications.

TradeSmart X also allows real-time upgrades and easier installation while adopting a very innovative use of the client’s desk top real estate”, commented Philippe Buhannic, CEO of TradingScreen, Inc. “Once again, TradeSmart sets the standard in the EMS space by bringing together speed, agility, simplicity, reach, power and stability. We are very proud to mark the tenth anniversary of the market’s first EMS by introducing our best version of TradeSmart to date”.

TradingScreen’s flagship product, TradeSmart, is a customizable front-end GUI (Graphical User Interface) that enables buy-side clients to trade a broad portfolio of financial instruments, around the clock, on any market and with a wide range of counterparties. TradeSmart is unique in its ability to aggregate multiple-dealers and multiple asset-classes (listed and OTC) onto a single screen format for electronic order routing. Its ASP (Application Service Provider) model enables very rapid deployment and activation of users into live trading and incorporates the most comprehensive and intuitive access to the proprietary algorithmic trading strategies offered by the leading global brokers. TradeSmart also makes available a number of modules that support other execution and order management activities such as Basket Trading, Pre and Post Trade Analysis, Allocations, Positions and P&L tracking. TradeSmart connects to all of the leading portfolio and order management systems to ensure complete integration into the workflow of the buy-side institution.

Over the past 10 years, TradingScreen has become the system of choice to equip the institutional buy-side trader across all client segments: Traditional Asset Managers, Alternative Investment Managers and Wealth Managers.

TradeSmart X will be introduced to the global trading community as part the TradingScreen Tenth Anniversary celebrations taking place in all the major global financial centers.

Source: Trading Screen, 23.09.2009

Filed under: News, Trading Technology, , , , , , ,

ConvergEx Rolls Out Five Additional DMA Connections to Emerging Markets

ConvergEx, a provider of investment technology solutions and global agency brokerage services, has added five new direct market access (DMA) connections: NASDAQ Dubai, the Indonesia Stock Exchange, the Taiwan Stock Exchange, the Shanghai Stock Exchange and the Shenzhen Stock Exchange.

With these additional markets, ConvergEx now offers DMA connections in 65 destinations around the world, as well as over 110 global markets through its portfolio and sales trading businesses. Clients can access these electronic connections through any ConvergEx supported front-end trading system, including all major order management (OMS) and execution management (EMS) platforms, the company explained. “These new connections keep our clients at the forefront of rapidly growing and increasingly important emerging marketplaces,” said William Capuzzi, president of ConvergEx’s G-Trade Services.

“Our clients appreciate the unique investment opportunities these markets offer as well as the ease of access our connections provide. ConvergEx understands the importance of building and maintaining state-of-the-art technology and lightning fast connections so we always keep one step ahead of client demand.”

Source: Securities Industry News, 11.08.2009

Filed under: Asia, China, Indonesia, News, Trading Technology, , , , , , , , , , ,

China Life Selects Charles River to Automate Investment Operations

Excerpt from Asian Investor highlighting China Life Asset Management’s selection of Charles River IMS to automate its investment operations across all asset classes.

China Life Asset Management Company, China’s largest institutional investor, has selected the Charles River Investment Management System (Charles River IMS) to automate its investment operations across all assets classes. The firm will benefit from extensive portfolio management, order management and real-time pre-trade compliance testing and monitoring capabilities on a single integrated platform, made available in a fully localized Chinese version.

“The China financial market is exceptionally fast paced. To be nimble in this ever-changing environment, and to be able to best cater to our customers, we needed an investment management system that is robust,” said Fengming Zhang, Executive Vice President, China Life Asset Management Company. “Charles River’s proven system, local knowledge and 24×7 regional support is critical to our growth strategy. We now have comprehensive portfolio management, and pre- and post-trade compliance capabilities that allow us to adhere easily to client mandates for our domestic Chinese business.”

“China Life Asset Management Company is a key strategic partner and Charles River’s first domestic asset management client in China,” said Cameron Field, Managing Director, Asia Pacific, Charles River Development. “As China rapidly deregulates its capital markets system, we are seeing increased demand by Chinese asset managers for a comprehensive front- to middle-office platform that can manage complex investment strategies as well as domestic products. Charles River IMS gives our clients the flexibility and necessary tools to create and manage portfolios of any asset class, including local Chinese equity and fixed income investments.”

Source: Charles River, 13.05.2009

Filed under: Asia, China, News, Risk Management, Trading Technology, , , , , , , ,

OMS/EMS Convergence?

Some predict that the EMS market may converge with the OMS market, but don’t be too quick to judge this book by its cover.


What Is an EMS? An execution management system (EMS) is a software-based platform that facilitates and manages the execution of securities orders, typically through the Financial Information eXchange (FIX) protocol.

EMSs have four key features: a trading blotter, connectivity, multiple destinations and real-time market data. The trading blotter is composed of an order entry screen where users initiate and monitor trading activity. Users can access brokers’ direct-market-access (DMA) capabilities and algorithms to carry out electronic trading strategies. The platforms enable both single-stock and portfolio trading capabilities.

An EMS offers multiple destinations to which to route a trade. Through the EMS platforms, users can connect to major exchanges, electronic communication networks (ECNs), alternative trading systems (ATSs), crossing networks and multiple brokers. Real-time market data enters the system from a combination of external feeds from exchanges and market data providers and, in some cases, internal proprietary data from the EMS provider.

It is worth pointing out that, by definition, DMA platforms either are single- or limited-destination systems. Although a number of DMA players call their order entry and management portals EMSs, TowerGroup draws a distinction between an EMS and a pure DMA platform.

In comparison, order management systems (OMSs) were designed as tools to allow firms to manage and document their trading activities electronically. With an OMS, firms easily can look back in order to analyze their orders. Since this modest beginning of OMSs as trading blotters with FIX engines, they have extended the breadth and depth of their functionality significantly. Today’s OMSs have emerged as portfolio management systems with functionality that ranges from pre-trade through post-trade support.

TowerGroup expects EMSs to follow a path similar to the one OMSs have followed through their evolution: The EMSs will increase the breadth of their functionality, adding analytics, portfolio staging capabilities and tighter systems integration. As a result, they will continue to substitute for OMSs in smaller asset management firms or hedge funds.

It Can Be Done

At the same time, the success of EMSs has been a rallying cry for OMS vendors, and TowerGroup is watching as OMS providers invest in changes in the architecture of their systems to support integration of real-time market data. Much of the development in distributing market data and enhancing ticker plants, however, is likely to make this area of competitive differentiation a moot point in the coming months. We also expect to see more investments to support the portfolio- and algorithmic-trading capabilities of traditional OMS players.

In short, TowerGroup anticipates that peripheral functionality in the two types of systems increasingly will converge. But we do not foresee the availability of only one integrated system because the two platforms’ core offerings serve different purposes and constituents. Although the EMS and OMS applications are similar, significant differences exist.

Use EMS, OMS or Both?

Most buy-side shops today are using an OMS, an EMS or both. The specific needs of each shop will drive its choice for adoption:

1. Traditional asset managers of any size will use an OMS to take advantage of broader functionality, including portfolio staging, compliance and post-trade support.

2. Traditional asset managers that trade infrequently and are less concerned with speed of execution will be well served by an OMS, which still provides options for routing trades, and provides the connectivity and compliance tools they need in order to manage their business successfully.

3. Traditional asset managers that trade actively, engage in list or basket trading, and require cross-asset-class trading capabilities will implement one or more EMSs.

4. Midsize or large traditional asset managers will deploy multiple EMS platforms on the desktop in order to placate traders who have individual preferences, to access broker liquidity offered only through a particular platform and to access third-party broker algorithms that may not be available through their current OMS.

5. Small hedge funds are more likely to forgo an OMS and use an EMS because they desire speed of execution.

6. The few large hedge funds will employ multiple EMS platforms and also use an OMS.

Of course, there likely will be more exceptions than perfect fits to these rules, and the reality is that the nuances and culture of each firm will drive its trading software deployment strategies.

What’s Next?

The buy-side software market has been a hotbed of acquisition activity over the past two years. Recent OMS deals such as ITG’s acquisition of Macgregor and the integration of Eze Castle with BNY Securities into the new ConvergEx Group follow almost a dozen EMS and DMA platform acquisitions by brokers, including Lehman’s acquisition of RealTick and JPMorgan’s acquisition of Neovest.

Brokers and software vendors clearly want to own the buy-side trading flow. Whether brokers are acquiring their trading platforms or OMS vendors are pushing networks, the extension of revenue beyond commissions or software fees, respectively, is driving firms in this direction.

But vendor risk has never been higher for a buy side that likes to own its own trading destiny. Likewise, existing players are becoming more competitive as OMSs and EMSs alike extend their securities capabilities into the realm of derivatives and complex fixed-income vehicles. Firms also will compete on peripheral functionality, including integrated transaction-cost analysis, real-time data, instant messaging, and integration of liquidity with crossing networks and indication of interest (IOI) networks alike.

There is one final consideration for buy-side shops that are evaluating their trading technology. As a result of acquisitions of EMS players, the environment may become more challenging for small and midtier institutional brokers that do not have sufficient funding or technology resources to build or buy their own EMS. It is clear that top-tier institutional brokers are building the infrastructure to protect and build their own trade flow in a zero-sum trading game as they battle to become the preferred broker to buy-side clients. TowerGroup believes that the brokerage pecking order in 2007 and beyond will be determined by the ability of many of these firms to integrate EMS platforms into their businesses.

Source: AdvancedTrading, 26.09.2006 By Gavin Little-Gill

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