Why the consolidated approach is addressing OMS and EMS deficiencies

  • July 22nd 2020
  • - 4 mins 54 secs read

As we move into the second half of 2020, hedge funds and asset management firms continue to face pressing OMS and EMS challenges.  However, OEMS solutions are evolving to meet these challenges head-on with the help of important advances in technology.

Industry pressures

Companies across capital management have had to contend with several persistent issues.

High costs of standalone OMS and EMS platforms

With the increased financial pressures facing asset management organizations of all sizes in recent years, there has been a widespread drive to cut operational costs and achieve greater efficiencies. A large part of this has included a resounding clamor where possible for consolidation across all departments where.

Firms have been eager to incorporate specific features within both the EMS and OMS into one system. For instance, this might mean using an OMS with advanced trade execution capabilities bolted on or an EMS with capabilities that enable users to manage regulatory compliance and reporting.

These, however, are mere add-ons rather than genuine consolidation. They meet the most pressing concerns that firms face, but why stop there? After all, it is now possible to bring all major operations and execution needs together into one system.

Difficulty in aligning the middle and front office

Investment firms are increasingly aware that front and middle-office communication and collaboration are rendered inefficient because of having to align two different operational systems.

Operations personnel and traders cannot perform at their best to maximize performance when a significant part of the working day is reconciling trade discrepancies between front and middle office. Non-existent or piecemeal integrations are a large part of this shortcoming.

Up to now, this has been the predominant modus operandi for asset management organizations because, frankly, it has been the only way without compromising the capabilities of each department by attempting to align them under one unified system.

Operational inefficiencies stemming from multiple platforms

Many firms are still reliant on standalone OMS and EMS products, and often other, independent systems for compliance, risk management, and other ancillary functions. These inefficiencies mean that users have to keep track of multiple passwords, juggle between systems throughout the working day, and transition between the different processes and rules that come with each.  Moreover, in this context, extracting data from the OMS to the EMS is an ongoing struggle. It’s more complicated than it needs to be. The consequence of having to manage and to maintain these disparate platforms concurrently is a sizeable daily workflow headache.

An operational setup should make the work process as smooth, efficient, and productive as possible. However, many firms are routinely facing an uphill struggle because of the challenges that the daily workflow poses. An additional, costly by-product of these challenges is either sub-optimal productivity or overstaffing within departments.

The core benefits of a consolidated OEMS

The operational benefits of implementing a consolidated OEMS platform span across the front and middle office departments.

A best-of-breed OEMS enables firms to reduce the cost of operating multiple systems in parallel.  Equally, a transition to cloud-based software (SaaS) means that no on-site install and ongoing maintenance or upgrades are required, which contributes to the lower costs.

With one product, users no longer have to switch between two or more platforms concurrently or have to build and maintain incomplete integrations. A consolidated OEMS offers a single sign-on, with one operating system, meaning consistency of processes and data transfers. For example, order generation, pre-trade compliance checks, and trade execution can all take place seamlessly within the same user interface.

As for bringing middle and front office together, an advanced OEMS can smooth out the workflow and strengthen the interdepartmental relationship by unifying them both under a single integrated operating system and data set.

Catering to risk and compliance obligations, leading OEMS platforms are incorporating automated processes, including call-back trade compliance, on-demand reporting, broker restrictions, and position and exposure limits, among other features.

Ancillary benefits of a consolidated OEMS

A leading OEMS should also incorporate other advanced features to meet firms’ operational needs with a holistic, turnkey product. These include algo strategy development, with the option of automatic scripting logic, data analytics and machine learning tools for intuitive reporting and business intelligence insights, along with trade workflow automation functionality to reduce human intervention, as exhibited in AutoRoute and AlgoWheel tools.

The widespread demand for the consolidation of the OMS and the EMS has now reached a point where it is no longer a trend but rather a base level requirement for investment management firms.  Many are now taking the plunge and are being pleasantly surprised by the ease and speed of implementation thanks to SaaS deployment, which has lent itself to the remote and rotational staffing policies since the onset of the Covid-19 pandemic.

In an industry that has already faced an unprecedented level of change in recent years while navigating an ever more competitive environment, firms are realizing that a consolidated OEMS can provide the sort of workflow gains and cost reduction that are becoming a must

Pierre Schroeder

Chairman of the Board and CEO