EMS and OMS

Order Management System (OMS)

Order Management System (OMS) applications enable managers and traders to keep track of trades, connect to other electronic trading systems, access real-time market data for liquidity, apply trading strategies, create and manage portfolios based on different models, monitor portfolio compliance, confirm the order compliance and provide detailed analysis and trade reports. Advanced OMS applications can provide additional functionalities like the real-time profit and loss functionality for different asset classes, pre-trade and post-trade compliance functionality, operations management, in-house budgeting and accounting functionality etc.

OMS applications have been in use since the days of pre-electronic trading and have evolved over the years with technological advances and market requirements. Often the OMS applications are legacy systems, evolving over time, to accommodate its organization specific needs and logic. Typically, an OMS architecture is a very heavy database-centric architecture. The OMS installations are onsite installations that reach several users in the organization.

With the emergence of Electronic Communication Networks (ECN) and fragmented markets, direct market access (DMA) to exchanges and brokers across the globe became feasible and affordable. Low latency networking, eliminating message hops and seamless processing thousands of messages and orders per second became the prime infrastructural requirements. As OMS applications need heavy architectural changes to meet such changing requirements, Execution Management Systems (EMS) came in use.

Execution Management System (EMS)

Execution Management System (EMS) applications are suitable for implementing any counterparty (market) dependant trading strategies, trading algorithms, real-time Transaction Cost Analysis (TCA) and Indication Of Interest (IOI) management. A typical EMS application offers a trading interface, connectivity with one or more counterparties (exchanges, brokers etc), execution management blotter and an efficient mechanism to process and manage the real-time market data. Most EMS applications leverage the FIX Protocol for their Direct Market Access (DMA) capabilities. EMS applications are lightweight applications which can run as desktop as well as hosted applications. Several EMS applications can run on a single desktop machine.

OMS or EMS

The Buy-side market participants can use OMS, EMS or both for managing their trade workflow. The debate over “EMS versus OMS” is quite old, since the emergence of EMS. Both address to the trade workflow process requirements, however their approaches differ.

The EMS applications mostly emphasize on the speed of processing, direct connectivity and front office tasks. On the contrary, the OMS applications are crucial for the internal order management and back office tasks like real-time analysis, reporting, data blotting, profit and loss analysis, resource allocation, budgeting etc.

The EMS applications mostly serve traders who rely on short term strategies and perform heavy intra day trading. Due to this, the execution speed and DMA are the priorities for the EMS applications. The Buy-side traders have never enjoyed as much independence in executing their orders as they do today using their EMS applications. The OMS applications are mostly built to provide comprehensive and long term trading strategies for fund managers and financial institutions. Speed of order execution takes a lower priority in the OMS applications. Under the pressure of changing market trends, the modern OMS applications have now begun to implement some EMS functionalities. Similarly, the higher end EMS applications tend to provide some OMS functionalities. The boundaries between OMS and EMS are now fading out. However, the cost and the size of OMS applications remain a significant hurdle in their wide scale acceptance.

Our approach to OMS-EMS convergence

The problem

OMS applications are bulky and feature rich applications and are not affordable to all Buy-side users. Over 70 % Buy-side users use EMS applications. Since most EMS vendors offer DMA capabilities only for specific counterparties, the desktop screens of Buy-side traders get crowded with user interfaces of several EMS applications. This results into errors and integration issues. It is practically difficult to integrate every EMS application with the central OMS or any other electronic trading application in order to leverage its back office functionalities and achieve higher performance.

Our solution

We have eliminated the need for having multiple EMS applications through our state-of-the-art “Connectivity Unlimited” approach. Our FIX powered solution can work as a single EMS application and provide DMA to any mber of FIX and non-FIX compliant brokers and exchanges all over the world. This solution can function with or without having an OMS to work with. However, it has the capability to integrate with any existing OMS or order generating application and merge its EMS features with other functionalities provided by the OMS. This OMS-EMS convergence occurs through one time system integration and results into a single, flexible, highly customizable, robust and scalable trading platform, which our clients can depend on for years to come.

Implementing the solution

FFS offers two approaches for enabling direct market access.

The first and the easier approach is to deploy FF.Trader, our FIX powered EMS, which can work without having an OMS. FF.Trader is a single, cost-effective, highly customizable and user-definable trading user interface. All you need to do is to plug in an Adapter for each exchange or broker of your choice and enjoy unlimited trading connectivity. These Adapters take care of interfacing and trading session rules set by the exchange or broker. The Adapters are easy to develop and fast to deploy. We provide plug-n-play Adapters for major exchanges and brokers like CME, Eurex and IB. We can also provide Adapters for other client requirements.

The second comprehensive approach is to deploy Endeavone EMS, our cost-effective, state-of-the-art, multi-market execution management platform for traders that demand best execution and maximum access to liquidity pools. Endeavone EMS can work without an OMS and has the ability to integrate with an existing OMS application. Moreover, it also allows to build your proprietary OMS around it and save costs. On the trading user interface front, Endeavone EMS can function with FF.Trader or allow you to develop your own trading interface around it. It can also integrate with the third party trading interface applications. Endeavone EMS puts no restrictions on the number of traders who use it or the number of exchanges and brokers it can connect to.

In either approach, the market data is provided via our Market Data Publisher Infrastructure (MDPI). The MDPI can connect to multiple data feed handlers for different exchanges and distribute this data to users in the common FIX format.