Order management systems that serve as the sell-side’s IT backbone can have a profound impact on the efficiency of broker-dealer sales desks and risk management practices.

A new report from Greenwich Associates, Moving the OMS Beyond Order Management, confirms that sell-side OMS has moved far beyond simply receiving and routing client orders to encompass all facets of the trade lifecycle.

As more institutional trading business moves to electronic execution, sell-side firms are realizing the value of unified technology platforms that manage orders across asset classes. At the same time, an increasingly complex market structure and extensive new compliance requirements are adding to an already long list of functionality these firms require from their order management systems [OMS].

“The modern sell-side firm literally could not do business without an OMS, which today does so much more than just manage orders. The crucial role it fills makes it all the more important that brokers select wisely for their business needs and budget,” says Richard Johnson, Vice President in Greenwich Associates Market Structure and Technology Group, and author of the report.

Managing Risk, Not Just Orders
The report is based on the in-depth interviews with sell side trading and technology professionals and interviews with 258 buy-side traders conducted as part of the annual Greenwich Associates Trading Desk Optimization Study. It concludes that broker-dealers are demanding OMS platforms that support multiple asset classes, provide pre-trade, real-time and post-trade analytics, and a wide range of sophisticated functions including risk analytics, compliance, reporting and transaction cost analysis (TCA).

In addition, with the regulatory focus now on market abuse, embedded tools that alert traders to longer-term patterns of market abuse could be a differentiating feature for sell-side OMS providers and reduce risks for large broker-dealers.

“Going forward, we expect sell-side compliance teams to push for more thorough and auditable processes,” says Richard Johnson. “Robust and customizable reporting within the OMS would reduce points of failure, streamline the workflow and prove more scalable over time as the business evolves.”