“When a buy-side firm wants to use an EMS to stage orders for liquidity, typically it realises that it needs better technology to interact with the market and orders,” says Paul Reynolds, head of fixed income at EMS provider TradingScreen. “Collecting data is one function of an EMS, another is connecting to a lot of venues, and another function is providing the EMS buy-side user with lots of choices about liquidity, so that they can prove they found the best possible trade for their customer.”
Speaking at the FIX EMEA Trading Conference on 15 March 2018, one senior fixed income dealer said, “The proliferation of EMS vendors in this space is reflective of the fact that OMS vendors just haven’t kept up with client demand.”
Complaints about order management system performance still dog the fixed income markets, increasing the likelihood of in-house technology solutions.
Forty-three percent of buy-side firms are upgrading their order management systems (OMSs) and 10% are switching OMS providers, according to research by block-trading platform Liquidnet released in March 2018. The big issue for most – 76% of respondents – was a need for standardised connectivity.
Increased efficiency, particularly around low touch trading, is also pushing asset managers to look at execution management systems (EMSs). Liquidnet’s research found that 43% of small firms and 64% of large firms were investing in an EMS, and 94% of those were choosing to do so to manage liquidity.
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