As the demands on the investment industry continue to evolve, so does the technology designed to meet them.
Take the Order Management System (OMS), for example. Launched in the mid-to-late 1980s, the OMS enabled asset management firms to track orders negotiated over the phone and improve paper-based recordkeeping.
As the Financial Information eXchange (FIX) protocol matured in the early-to-mid 1990s, OMSs added electronic order routing capabilities, enabling firms to securely automate and streamline the order routing process while supporting growing volumes of trades across multiple brokers.
Execution Management Systems (EMSs) built on this foundation. At a time when trading was transitioning from a high-touch, paper-based process to low-touch electronic execution, the EMS was developed to help sell-side brokers and day traders navigate fast-moving electronic markets.
Sellside platforms introduced direct electronic order routing, and the rise of algorithmic trading allowed firms to handle higher volumes with minimal human intervention.
As electronic trading expanded globally across asset classes, buy-side interest in EMSs grew, and adoption increased.
Today, as industry challenges grow and change, the evolution of investment technology continues.
As outlined in the Trading Technology Buyer’s Guide, investment managers must keep pace with that evolution by learning how each system helps them navigate the complexities of today’s market.
To help them gain that insight, this post explores the functionalities of OMS, EMS, and the combined Order and Execution Management System (OEMS).
What is an Order Management System?
The OMS, typically used by investment managers, is principally concerned with front- and middle-office functions. While early OMSs focused on equities, today, the OMS supports firms’ ever-expanding arrays of asset classes.
OMS technology streamlines daily investment cycles by automating allocations and providing position-checking. In addition, the OMS enables compliance capabilities across securities, asset classes, portfolios, portfolio groups, and strategies.
To support the demands of today’s investment firms, a modern OMS must also include capabilities like portfolio modeling and analytics, the ability to view P&L and exposures, order routing and decision support and access to trade execution analytics functionality.
As the hub of your investment activity, your OMS must be configurable and flexible. If the trade generation process is clunky and inefficient, it wastes valuable time and puts investment managers at a higher risk for errors and missed opportunities.
Finally, your OMS platform must be able to grow and scale with you as your needs change – and they most certainly will.
Without that scalability, your firm may face significant operational inefficiencies, including costly upgrades, custom enhancements, or even full system replacements. Paying for such services quickly drives the total cost of ownership beyond any initial savings a so-called “affordable” option once promised.
What is an Execution Management System?
The EMS is your firm’s direct connection to the market. Its primary function is to deliver fast, seamless access to global liquidity while providing traders with more sophisticated execution options than the OMS.
An EMS should offer automated trading capabilities, like rules-based order routing and advanced order types, such as conditional orders, list trading and multi-leg orders.
In addition, today’s EMSs provide traders with more in-depth, real-time market data and insights. They can also generate fast, accurate execution reports and Transaction Cost Analysis (TCA).
Compliance often becomes even more challenging in fast-moving markets with high volumes. A good EMS integrates compliance into every stage of your workflow to keep your trades flowing without fear of noncompliance.
Trends in Investment Management: The Power of the OEMS
Investment firms face a growing list of challenges — from the operational complexity of expanding asset classes and mounting competition to shifting economic conditions and evolving regulatory demands.
Many investment managers turn to an Order Management System (OMS) to meet these challenges. Yet all too often, these firms select a provider that lacks the integrated, advanced Execution Management System (EMS) functionality they need.
The result is often a patchwork setup that relies on a third-party EMS, creating clunky, FIX-only workflows that further complicate the very challenge managers were trying to solve.
The better path is true integration: Combining the OMS and EMS into a single Order and Execution Management System (OEMS) built on a centralized source of truth.
A best-of-breed OEMS features deep, code-level integration that fully synchronizes data between systems. This seamless experience provides users with one unified platform — combining the power and functionality of both OMS and EMS without the need to toggle between screens or duplicate processes.
By relying on a single OEMS, firms can unlock significant benefits across trading, compliance, technology and operations. Streamlined workflows reduce cost and risk, while a fully synchronized platform enables operational alpha, primes the firm for regulatory alignment, and preserves the speed-to-market your firm needs to compete in today’s markets.
Getting the Service You Deserve
No matter which technology your firm chooses — OMS, EMS or OEMS — it must be backed with strong service and support.
A vendor’s managed services offering can be a vital resource for your firm, allowing your internal team to offload routine tasks and focus on alpha-generating activities. In addition to these paid services, be sure to ask your vendor about what services are included with the cost of your technology.
To realize the value of these services, however, your vendor’s service team must have experience supporting firms of similar size, strategies, and operational challenges.
When issues arise, your firm needs to know that its vendor’s support team will respond promptly and has the knowledge necessary to fully understand your firm’s business, workflows, and history with the technology.
Before you sign on with any vendor, it’s also worth clarifying how the service is structured within your agreement. If support is priced separately from the technology, you may face unexpected or “hidden” costs that increase your total cost of ownership.
Trusted Front-Office Technology Investment Firms Can Grow With
Whether investment managers choose SS&C’s Eze OMS, RealTick EMS or best-of-breed OEMS technology, the efficiency and accuracy these platforms deliver — combined with SS&C’s industry-leading service and support — do more than enhance operations. They empower investment firms with the confidence to meet today’s market challenges head-on.
Achieving that confidence requires more than just technology. It takes a trusted partner with the technical foundation, industry expertise and dedicated people to support your firm’s growth — not only at the start, but as your needs evolve over time.
From trading and compliance to cost reduction and workflow optimization, SS&C’s front-office solutions help firms increase efficiency, reduce risk and stay compliant — giving them the edge to compete and thrive in a fast-changing market.
Whether you’re buying, upgrading or re-evaluating front-office systems, SS&C’s Trading Technology Buyer’s Guide is your definitive resource for understanding today’s options — and for setting your firm up for success in the years ahead.
