A Portfolio Order Management System (POMS) combines the functionality of Portfolio Management Software (PMS) and Order Management Systems (OMS). The combination creates a comprehensive solution for workflows in the Front Office.
This article explores the evolution of POMSs, their key features, and how they stack up against standalone PMS and OMS. You'll also discover the importance of integrations and how automation can benefit your workflow.
Vendors initially developed Portfolio Management Systems (PMS) to support portfolio modelling and decision support needs. Portfolio managers relied on PMSs to conduct what-if analyses and simulate portfolio changes, including cash ladder checks.
Order Management Systems (OMSs), on the other hand, were created to aggregate orders, route them for execution, and check pre-trade compliance.
| PMS Capabilities | OMS Capabilities |
| What-if Analysis | Order Creation & Rebalancing |
| Portfolio Modelling | Order Routing |
| Real-time Portfolio Tracking (limited cash views) |
Compliance Checks |
Today, there is a clear trend towards adopting broader, more integrated systems encompassing multiple functional areas. This shift has made standalone PMS less common as asset managers seek solutions to streamline their workflow.
The emergence of Portfolio Order Management Software represents a significant milestone in the evolution of investment technology. By combining the functionality of Portfolio and Order Management, a POMS eliminates the need for manual data transfer between systems. Such a combined system reduces errors and improves efficiency.
From this simple table, many advantages of adopting a POMS are immediately apparent. A POMS simplifies the portfolio planning and order-raising process by consolidating PMS and OMS functionality. This integration allows pre-trade compliance to become part of the PMS workflow, reducing manual effort and minimising errors.
An even broader solution than a POMS is Investment Management Software (IMS), which covers front and middle-office workflows. An IMS provides a holistic view of your investment process and enables better decision-making because data processed by the middle office is immediately available for the front office to see.
By opting for a POMS, you can overcome these limitations and enjoy a more efficient, integrated approach to portfolio management. However, evaluating your specific needs and choosing a solution that aligns with your investment strategy and goals is essential.
The OMS, also called a Trade Order Management System, oversees the lifecycle of trades, from creation through compliance and downstream for affirmation and, eventually, settlement.
On the other hand, an EMS focuses specifically on assisting traders with executing orders in the markets.
The meanings of these terms might differ between the buy-side and the sell-side. This article focuses explicitly on the buy side.
Since a POMS doesn't cover all functional areas of an asset manager, it needs to be connected to upstream and downstream systems, such as:
Such integrations can come in different shapes:
Of course, with an end-to-end IMS, the challenge of these integrations is removed since that single vendor delivers all functional areas.
Automation is a game-changer in the world of portfolio order management systems. By leveraging the power of automation, you can streamline your investment process, reduce errors, and make more informed decisions. Here's how:
Constructing portfolios and analysing "what-if" scenarios can be time-consuming and prone to human error. However, with automation in your POMS, you can:
This enables you to make better-informed investment decisions and adapt quickly to changing market conditions.
Some POMS will automatically create a comprehensive audit trail of all actions. The benefits for you are:
| Benefit | Description |
| Transparency | Clear visibility into the decision-making process |
| Accountability | Ability to trace outcomes back to specific trades and assumptions |
| Compliance | Evidence of adherence to regulatory requirements and investment guidelines |
With a robust audit trail, you can demonstrate the integrity of your investment process and protect your firm from potential legal or regulatory issues.
As your assets under management grow and your investment strategies evolve, automation allows you to scale and adapt with ease. Automated systems can handle a growing number of portfolios and positions, without you having to scale your team.
Such scalability ensures that your POMS can grow with your business, enabling you to seize new opportunities and confidently navigate complex market environments.
In conclusion, Portfolio Order Management Systems have changed how asset managers handle their investment processes. By combining the functionalities of PMS and OMS, the POMSs offer a comprehensive solution that streamlines workflows and enhances decision-making.