Trading technology available today has the potential to shape how buy-side firms manage risk and achieve more performance, according to participants of the Buy-Side Trading Summit that occurred in Naples, Florida in October 2010. Investment managers spend a lot of time talking about optimizing their OMS/EMS systems these days. Larry Cohn, CIO of Baron Capital, recommends that CIOs and core tech team members discuss what they want the Order Management System to run.
By the nature of the OMS's scope -- touching compliance, portfolio managers, traders and others -- choosing a new OMS requires careful selection. A small vendor may not keep pace with accelerating market changes over the next three to five years. LavaX, TradeSmart and Trading Screen are well-known OMS vendors used in multiple trading environments like large broker-dealers.
Choosing the EMS requires less concerns in today's environment. Most larger firms run multiple execution management systems, depending on the trader's needs. If a firm needs a new EMS system, the firm's trader and technologists get together to choose the right one. Most EMSs are funded by broker-dealers with whom the buy-side firm transacts orders, so the investment management firm doesn't bear most of these costs associated with a new EMS.
Technologists talk about convergence of OMS and EMS platforms. Small trading desks can use a simple platform, but most technologists say that larger operations still require discrete OMS and EMS systems.