The 2023 Equities Leaders Summit in Miami took place between 23 – 25 January. As the largest gathering for Equity Trading professionals in the US, the event brought over 200 trading desk executives together to share ideas and innovations, look at disruptive technologies, and take a glimpse into the future. interop.io’s Head of Solutions, Reena Raichura took part in The Next Big OMS/EMS Evolution: Achieve a More Efficient Workflow Utilizing the Latest Innovations panel to discuss how firms can achieve more efficient workflows. She was joined by Brian Strike from Mesirow, Mike Smith from IPC Systems and Jesse Forster from Coalition Greenwich, who moderated the panel.
One of the hot topics that the panel discussed was how an increasing number of firms are recognizing the importance of workflow efficiency for trading and the vital role that desktop integration can play in this.
We explore some of the main takeaways from the panel discussion below.
The importance of interoperability for equity trading
Moderator Jesse Forster opened the discussion by noting that most traders are not involved in the selection of the Order Management Systems (OMS) and Execution Management Systems (EMS) they use. According to Coalition Greenwich research, 86% of the buy side use a third-party OMS. Around 40% use a single OEMS and another 40% use separate systems.
With this in mind, the first topic that the panel discussed was how important the interoperability factor is in the frame of innovation and efficiency.
Reena took the stage and highlighted that interop is rapidly becoming the number one ask from buy and sell-side firms to achieve workflow efficiency and most importantly, effectiveness across the full trading lifecycle. She started by addressing the challenges that portfolio managers and traders face today. On average these users work across up to 15 applications at any one time, such as OMS, EMS, market data terminal, position and risk system, analytics, research, chat and others to get their jobs done. The issue is that none of these applications has been made to talk to each other at the desktop level. Therefore, portfolio managers and traders end up being confined to data and workflows within the walls of single applications, yet their job requires them to access data across multiple applications to complete a workflow. This means they end up having to swivel-chair between them, copying and pasting, and rekeying data. This is slow, inefficient and error-prone.
To add to the complexity, she continued, OMS and EMS vendors have traditionally been siloed into different asset classes. Although many now claim to be multi-asset, they still specialize and favor one asset class over another as this is how they have evolved. As a result, many trading desks will still use multiple OMSs and EMSs per asset class. This means even more fragmentation on the desktop.
Reena conveyed that from an end-user perspective, in today’s digital world, portfolio managers and traders should be able to work with their applications seamlessly in the same way that they do on their cell phones. Interoperability is instrumental in achieving this, as it streamlines workflows across different applications regardless of the underlying technology. As an end-user himself, Brian resonated with the challenges presented by Reena, agreeing that interop has the power to solve them.
How are OMS & EMS vendors supporting convergence and interoperability?
The conversation naturally moved to what OMS and EMS vendors are doing to support convergence and desktop interoperability. Reena described how in the past, OMSs and EMSs tried to be everything to everyone. She said that although order management or execution management were their core functions, they would also offer analytics, market data and research and end up diluting their specialism.
She believes that we are now entering both an era of specialism, as well as an era of convergence where vendors are moving towards becoming the best at their core functions rather than offering multiple other functions. And when they do offer other functions, this is typically through partnership and interoperability now. She continued that as more and more specialist applications come on board, the need for vendors to be desktop integration ready is becoming increasingly crucial and the demand is growing. Reena noted that vendors are beginning to shift their mindset. They are beginning to understand the importance of being part of an ecosystem rather than an island. No application is an island and it’s the ecosystem that our clients are attracted to. To complete a workflow, several applications need to be used simultaneously. Therefore, the ability to pick ‘n’ mix applications of choice and build a best-of-breed platform that works effortlessly is what clients are demanding.
Mike agreed and mentioned that augmenting voice trading workflows was a priority for them at IPC. Reena stated that this was easily achievable through desktop integration.
What should the buy side and sell side be thinking about?
To wrap up the discussion, Reena gave her perspective on a number of things that both buy and sell-side firms should be thinking about with regard to digital transformation and modernization in general:
Getting Business Value Quickly – The ultimate goal for workflow efficiency is creating a seamless platform experience for end-users where you can mix and match best-of-breed applications of choice. But digital transformation is a journey and most capital markets technology stacks are between 15 and 20 years old. So, the first thing to note is that you can get workflow efficiencies and business benefits now with the applications you already have in a matter of days using technologies like interop.io. You don’t have to wait for a multi-year digital transformation to come to fruition. For example, just stitching up an OMS or EMS with a pre-trade analytics platform enables traders to get the market impact of an order or basket in a single click and that may cause them to trade differently. During a fast market, if that workflow isn’t automated, they may miss these insights and trade adversely. Therefore, incremental low-risk change that gives you business value now is something to consider strongly.
Vendor Selection – When making vendor selections, you should be thinking about interoperability and APIs. Which vendors are the most open and flexible for integration? This is fast becoming a critical part of the selection criteria.
Partnerships – Don’t be afraid to partner with vendors. We have moved away from the old ‘build vs. buy’ debate to ‘buy, build and blend’. Collaboration with vendors is key to building out the best platform for your business.
BizTech Collaboration – Finally, going back to Jesse’s opening point, Reena highlighted how vital it is that the business is involved in the selection of vendors and the digital transformation journey in general. Strong collaboration between business and technology is key for success. The business should be driving the technology agenda rather than the other way around.