Increase operational efficiency
Choosing the best trade order management system is no easy task. Solutions are fit for different purposes, from single portfolio stock picking workflows to rebalancing hundreds of funds or mandates against model portfolios.
To complicate things further, an Order Management System for trading (OMS) can be standalone software or a component in a broader solution, such as a front, middle and back office solution.
For total transparency, Limina provides an OMS as one of the essential components in our investment manager software. To make it as fast and easy as possible for you to figure out whether to consider Limina as a solution, we have created two articles for you:
- what firms Limina is most suited for and
- when Limina might not be the right choice
Ensure you know the system architecture you want
Systems for investment managers can cover a narrow scope or be broad. An Order Management System (OMS) is just a tiny part of the full software capabilities an asset manager needs. The chart below summarises the capabilities to the left and visualises 6 different system architectures (operating models for investment managers).
The definition of an Investment Book of Record is how it manages positions and cash. Every OMS has an IBOR but of different types, such as:
- Flush and fill. This is the most common historically, where positions and cash are loaded every morning from an accounting source. Intraday trades are then added to the view. The downside is that the flush-and-fill approach doesn’t achieve completeness. It might miss future cash movements and cannot show a settle date cash ladder.
- Transaction-based, also called a live-extract Investment Book of Record (IBOR). This type of IBOR approach is new since 2014, and only two vendors in the market support the Global IBOR Standard (Limina is one). Such an IBOR solution solves other business problems and helps you overcome the above challenges.
Cost is a critical component for any business and any system evaluation. We’ve created a guide that explores the costs associated with a buy-side system. We also publish price examples for our solution, which you can find here on our website (from the top menu navigation).
Considerations When Identifying the Best OMS Trading Systems
There are numerous factors to consider when selecting a suitable OMS for your firm. For any system procurement, it’s vital to ensure that the solution you choose meets your business needs today and in the future.
Of course, mapping out your requirements today, such as asset class coverage, pre-trade compliance rules coverage, matching workflows, etc, is essential. There are also more subjective matters to look at. Below are three aspects we recommend paying extra attention to when comparing OMS vendors.
1. Time to Market
It’s important to remember that “time to market” is not simply about the initial implementation of the system. It also includes any future changes, such as new integrations and workflows. Upgrades are one key component, i.e. the vendor regularly upgrades the software.
We also recommend asking the potential vendors to provide reference clients, specifically ones where they’ve delivered on future requests that were unknown at the time of contract signing. The answer will give you a good idea of whether the potential vendor will be able and agile enough to meet any future requirements you may not yet be aware of.
2. Integrations/Openness of the OMS Software
A platform’s ability to integrate with current tools and processes is the key to lower operational risk and increase scalability (automation). If the OMS vendor can’t offer the integration capabilities you need, you’ll struggle to scale your business to the desired level.
As you will have an ecosystem of service providers and systems, retaining the autonomy to choose these systems, data sources, and service providers is vital. It is also important that the IMS can seamlessly connect to all.
With Limina, an open platform, there are three options for integrations:
- Managed integrations, where we take responsibility for setting up and maintaining the integrations, such as FIX Connectivity for trading.
- An import/export application that lets business users configure connections to custodians and admins without writing code.
- Full API access for those who wish to create bespoke code integrations.
You can read more about the six approaches to integrating any investment management system or service provider in our dedicated article.
3. Efficient Order Workflows for Multiple Styles of Investment
The best trade order management systems offer flexible yet intuitive solutions for complex workflows. Efficient order workflows will help streamline and automate repeatable business tasks, minimising room for errors through in-depth data insights and increasing overall operational efficiency.
For example, an OMS that facilitates the ability to trade different asset classes with screens and workflows tailored to those assets increases efficiency. Having complete portfolio views and dashboards in your portfolio tracking software, where all data is consolidated, increases your oversight.
Key Questions to for the Top OMS Providers
Ensure that the OMS Software vendor you choose is a good match for your firm. There are various questions to consider during this phase, from exploring the vendor’s reputation to their culture. We’ve outlined some of these questions to ask below.
1. Is the OMS Provider Reputable and Reliable?
Your firm must be confident that prospective vendors with trusted and proven solutions are experienced and reputable. Ensure the OMS provider service firms with similar portfolio structures and asset classes to you, as this is a good sign that they’ll have the insight and expertise your firm and your workflows require.
Supporting questions:
- Does the vendor have many client testimonials? Are those testimonials focused on value that is the same as what you’re looking for?
- Are most clients they service similar to you, or are you an outlier?
- What is the “word on the street” about the vendor? Try to find informal references through your network, and don’t just rely on introductions made by the vendor
2. Does the OMS Vendor Take a Partnership Approach?
We advise choosing a vendor that takes a partnership approach, as this ensures that the solution will meet your specific needs. Even if the provider invests heavily in R&D, it doesn’t mean that you will reap the benefits.
Supporting questions:
- Does the vendor welcome regular feedback?
- Can the solution be adapted to your unique needs? If yes, is it via configuration (cost-efficient) or customisation (expensive)?
- Does the vendor take a collaborative approach with its users?
Summary of the Best OMS Trading Systems
Let’s recap the advice provided in this article:
- Consider what type of OMS you’re looking for: a flush & fill or a transaction-based IBOR
- Ensure you understand the total cost of ownership of your chosen OMS solution
- Confirm that the solution offers all the capabilities you need, such as:
- Efficient order workflows for multiple styles of investment
- Accurate real-time views of data in all areas for all users
- Strong integration capabilities
- Fast time to market
- Does the vendor:
- Provide a reputable and reliable solution?
- Take a partnership approach?
We hope that the considerations outlined in this guide will help you to judge the suitability of different solutions and ask prospective providers the right questions to power your quest for the best OMS trading system for your business.
