Order Management Systems Take Centre Stage

Financial News, June 12, 2002 | Go to article overview

Order Management Systems Take Centre Stage


Byline: Heather McKenzie

The fewer people who have to key in trade information, the fewer opportunities for error. That is the basic principle driving the adoption of order management systems (OMSs) at investment banks. The increased automation of the trading lifecycle and the quest for straight-through processing (STP) in the past few years have made these systems much more attractive to financial firms. They have evolved from basic trade creation and management workflow to encompass myriad functions such as execution, order routeing, confirmation, accounting, allocation and network connectivity.Fritz McCormick, analyst at US firm Celent Communications and author of the report Ranking the Vendors of Sell-Side Order Management Systems, says: The OMS is being seen as the new pivot point for internal and external STP. John Wilson, director at CityIQ, a London securities industry consultancy, says the establishment of central dealing desks by investment banks has led to increased use of order management systems. Once that central environment was established, it became much easier to introduce an OMS, Wilson says.The basic purpose of an OMS is to enable order capture at any given point, be it a sales desk within an institution that sells over the telephone or, as is increasingly the case, a screen-based system supplied to clients by investment banks. Greg Johnson, sales director at GL Trade, the financial trading software developer, says: At the front end, an OMS should have the ability to capture orders at the point of initiation, route the orders to trading desks and then enable the order to be put into the market. Moreover, the OMS should then enable clients to receive fills in real time.The centralisation of dealing has enabled more complex trading scenarios to be applied. This, in turn, is placing emphasis on OMS to handle more of the trade flow. The OMS should help the dealer to perform routine tasks, allowing straightforward orders to zip past the dealer and hit the market without interference. If you automate the clean and simple stuff, the dealer can concentrate on the more complex trading scenarios, says Wilson.Beyond the front office, a good OMS should enable investment banks to reduce the high number of back office and settlement staff in proportion to the money earners at the trading desks, says Johnson. Growth in equity order flow is creating an environment in which OMS vendors must provide connectivity and smart order routeing features to meet customer demand, says Celent's McCormick. Where alternative trading systems are further fragmenting the market by creating multiple execution points, OMS solutions are moving into the fray, in many cases with new functionality, in order to keep buyside and sellside firms abreast of all possible execution points. Without such systems, best execution as a concept is all but lost, he says.Globalisation is creating additional complexity. Many view the OMS as an important factor in solving the problems of multi-currency and language support for execution and accounting, as well as cross-border trading, clearing and settlement, says McCormick. GL Trade's Johnson agrees that globalisation is an important issue. He says: Markets are now global and investment banks need to ensure that all the locations of the institution are kept in touch in order to take advantage of internal crossing opportunities, for example. An OMS can also ensure that traders operating in different branches of an institution do not exceed set limits.McCormick identifies a number of functions that an OMS should offer, including order routeing and connectivity, position-keeping, compliance, auditing and risk management. With the increased trading volumes on electronic communications networks and alternative trading systems, order routeing has become crucial as sellside firms take their business to a growing number of alternative destinations in order to find best execution.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Order Management Systems Take Centre Stage
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.