Skip to main content
pilogo-NEW
Subscribe
  • Subscribe
  • My Account
  • login
  • NEWS
    • Alternatives
    • Consultants
    • Defined Contribution
    • Frontlines
    • Hedge Funds
    • Investing / Portfolio Strategies
    • Money Management
    • Pension Funds
    • People Moves
    • Private Equity
    • Real Estate
    • Searches & Hires News
    • Special Reports
    • Neil Sheth
      More asset owners clamoring for multistrategy private credit
      H.I.G. Capital promotes 2 to co-president
      Pantheon hires global head for private debt
      Silver Lake reorganizes leadership
    • Mercer appoints global alternatives leader for wealth business
      KPMG offloads pension advisory unit to private equity firm
      Ascensus snaps up Nyhart in latest deal
      Willis Towers Watson exec promoted to lead retirement unit
    • Kathleen Long
      Plans enticing 401(k) savings even without employer contribution
      Joe Caldera
      Group acting to plug a gap in retirement
      Jean Young
      Analysis on stretching the match shows it doesn't work as intended
      Drew Carrington
      New data questions conventional wisdom
    • Youngjae Ryu
      Korea Corporate Governance Forum set to debut Dec. 12
      MOney maze
      PLSA has tips for trustees of U.K. retirement funds
      Norm Champ
      Norm Champ shifts his focus to financial literacy in latest book
      Ray Dalio book
      Dalio releases illustrated version of ‘Principles’ book
    • Macro hedge fund Stone Milliner shutting down
      James Medeiros
      Hedge fund managers are warming up to custom funds
      Louis Bacon
      Moore Capital's Louis Bacon to quit money management business
      James Yeh
      Citadel promotes James Yeh to president and co-CIO
    • CalPERS slates $1.2 billion for private equity
      Parthenon Capital raises $2 billion with latest private equity fund
      Leonard Green raises nearly $15 billion in 2 funds
    • 1251 Capital acquires majority stake in Ziegler Capital
      First Eagle Investment Management to acquire THL Credit Advisors
      Investor checks on manager sexual harassment are improving, but still too low
      Apollo Global taps Bain Capital veteran to lead its Japan business
    • CDC, Laerernes commit to Amundi, EIB green bond program
      AP1 weighing cuts to active equity managers
      CalPERS slashes equity emerging managers program
      Canadian multiemployer plan invests in cannabis company WeedMD
    • Mercer appoints global alternatives leader for wealth business
      Apollo Global taps Bain Capital veteran to lead its Japan business
      Realdania picks new CIO
      BlackRock's Mark Wiseman departs after failing to disclose relationship
    • Parthenon Capital raises $2 billion with latest private equity fund
      Investindustrial raises €3.75 billion with seventh European buyout fund
      Sightway Capital closes first fund with $1.2 billion
      Private equity practices aired at House hearing
    • Schroders appoints real estate capital partners head
      CBRE acquires U.K. real estate debt investment business Laxfield Capital
      USAA to sell controlling interest in real estate unit
      Cold storage
      A hot time for those seeking the cold
    • CalPERS slates $1.2 billion for private equity
      Louisiana Teachers commits $125 million to private equity
      Tennessee Consolidated allocates $850 million to 7 managers
      Texas Teachers assigns more than $500 million to alts
    • The best places to work in money management 2019
      Investment Consultants
      The 2019 Excellence & Innovation Awards
      Top-performing managers Q3 2019
  • Data
    • Research Center
    • Searches & Hires Database
    • Searches & Hires News
    • RFPs
    • Charts / Infographics
    • Sponsored Research
    • Trackers
    • Q3 2019 money manager M&A activity summary
      Q3 2019 legal overview report
      Q3 2019 searches and hires overview report
      P&I resources can give a leg up in winning new business
    • CalPERS slates $1.2 billion for private equity
      Louisiana Teachers commits $125 million to private equity
      Tennessee Consolidated allocates $850 million to 7 managers
      Texas Teachers assigns more than $500 million to alts
    • CalPERS slates $1.2 billion for private equity
      Louisiana Teachers commits $125 million to private equity
      Tennessee Consolidated allocates $850 million to 7 managers
      Texas Teachers assigns more than $500 million to alts
    • Transitional Manager Services
      457b DC PENSION PLAN
      Overlay and Passive Risk Balanced Investment Manager
      In-Kind Distribution Management Services (Private Markets) Provider Search
    • To cheap large-caps go the spoils
      Only place to go is ... down
      Equity leads DC exodus amid rising markets
      Hedge fund performance fees down 11% in 2019
    • Institutional Investors: Shared Expectations, Divergent Paths
      Global Investor Study 2016
      Workplace Financial Wellness
    • U.S. Endowment Returns Tracker
      Pension Fund Returns Tracker
      Earnings Tracker
      Corporate Pension Contribution Tracker
  • Insights
    • Opinion
    • White Papers
    • Industry Voices
    • Other Views
    • Partner Content
    • Publisher's Update
    • Multiemployer fund legislation cartoon
      Multiemployer compromises needed
      SEC cartoon
      SEC rules need measured response
      DC West poster
      Financial wellness gets spot at the table
      High hopes for consistency and guidance from Scalia
    • Strengthen Your Core: Flexible Multi-Sector Strategies for a Low-Yield World
      WisdomTree Yield Enhanced U.S. Aggregate Bond Fund
      Automation, lower fees driving institutional interest in factor investing and smart beta strategies
      A Great Time to Be Agnostic?
    • Gerald Cooper
      Commentary: Single-asset deals – a structure benefiting GPs and LPs alike
      Gordon Latter, Timur Kaya Yontar and Frank Benham
      Commentary: Plan sponsors, do you know your credit risk?
      Timothy Boomer
      Commentary: For plan sponsors, derivatives shouldn’t be a dirty word
      Martin Vogt
      Commentary: Renewables investing makes inroads in the Caribbean, Central America
    • Commentary: Stronger partnership needed between shareholders, managers
      Commentary: Revised statement on corporate purpose misses the mark
      Commentary: The associated costs of DB terminations
      Commentary: Support the Butch Lewis Act
    • P&I Content Solutions
      OCIO graduates from education phase
      P&I Content Solutions
      How to navigate the choppy investment waters expected in 2020
      P&I Content Solutions
      What it takes to get retirement income right
      P&I Content Solutions
      EDHEC Research For Institutional Money Management - December 2019
    • Everything Must Change
      Tomatoes & Investments
      Baby, it’s hot outside!
  • Multimedia
    • Videos
    • Webinars
    • Polls
    • Slideshows
    • Charts / Infographics
    • Excellence & Innovation Awards 2019: Laura Mittelstaedt
      DC West 2019
      Excellence & Innovation Awards 2019: Lisa Joe
      DC West 2019: Empower Retirement's Doug Peterson on cybersecurity
    • Finding the Positive in Negative Interest Rates
      How to Position Institutional Portfolios to Capitalize on China’s Growth
      Financial Wellness: Gaining an edge with plan sponsors
      Trends in Hedge Fund Investing
    • POLL: Creating a great workplace
      POLL: Shared values between money managers and plan sponsors
      POLL: Climate change's impact on investing
      POLL: Ultralong-term U.S. Treasury bonds
    • view gallery
      85 photos
      Best places to work in money management 2019
      view gallery
      21 photos
      The world's 20 largest retirement funds
      view gallery
      11 photos
      Top 10 DC money managers
      Top 15 managers by worldwide institutional AUM
    • Tradewatch for 3Q 2019
      Graphic: In ESG investing, global governance matters
      To cheap large-caps go the spoils
  • Events
    • Conferences
    • Webinars
    • East Coast DC Conference
      Fixed Income & Credit
      DC Investment Lineup
      ESG Investing
    • Finding the Positive in Negative Interest Rates
      How to Position Institutional Portfolios to Capitalize on China’s Growth
      Financial Wellness: Gaining an edge with plan sponsors
      Trends in Hedge Fund Investing
  • Careers
  • Research Center
MENU
Breadcrumb
  1. Home
  2. Print
May 30, 2005 01:00 AM

Order management systems win in NYSE-Nasdaq fight

Gregory Crawford
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    Vendors of order management systems stand to benefit from the ongoing battle between the New York Stock Exchange and the Nasdaq Stock Market for equity trading supremacy, according to industry observers.

    That's because regardless of which market ends up on top, the systems — software that allows traders to send their orders and handle reporting and settlement — will serve as the intermediary between the market and the traders.

    "Order management systems are the beneficiaries of (market structure changes) because they own the desktop real estate at the buy side," said Henry Yegerman, director of research product management at ITG Inc., New York. "They can be the intermediary between the buy side and the sell side in delivering analytics and execution."

    Those market structure changes, which all reflect the increasing importance and use of electronic trading, include:

    • the Securities and Exchange Commission's Regulation NMS, which, among other things, requires that orders be sent to the market center with the best price for automatically executable orders;

    • the merger agreement between the NYSE and all-electronic Archipelago Holdings Inc., Chicago; and

    • the New York-based Nasdaq Stock Market Inc.'s planned acquisition of INET, the electronic trading platform owned by Instinet Group Inc., New York.

    Power shift

    Mr. Yegerman explained that increased electronic trading and the corresponding growth in using direct market access tools, which allow traders to send orders directly to a specific market center, have shifted the balance of power to the buy-side trader from the sell side, with order management systems in the middle.

    "The sell side is in a rush to meet the demands of the buy side, and the OMS vendors have become like a supermarket, providing shelf space for the sell side to the buy side," he said.

    William Cline, managing partner in the global capital markets practice at management consulting firm Accenture, New York, said he wasn't sure OMS vendors would be the big winners from the market structure changes but said the importance of their role, already crucial in the trade cycle, would grow.

    Mr. Cline added that as the changing market structure raises the profile of order routing — directing trades to various execution venues — successful order management systems will let buy-side investors write their own routing "rules" to achieve best execution.

    "I believe the rules themselves will become very much a competitive differentiator," he said. "If my rules are more sophisticated than yours and they lead to better best-execution capability, I think that's where the competition starts."

    For example, ITG's Triton trading system, which is designed for trading lists of stocks, specific strategies and quantitative methods, can be customized for each client and has the flexibility to be changed before a trade or during a trade, explained Ian Domowitz, a managing director at ITG.

    "If you tie that level of functionality directly back to the OMS — Triton integrated with the OMS — you take as much of the friction out of the system as possible," he said, which adds value for the buy-side trader.

    But Robert Hegarty, vice president of securities and investment technology at TowerGroup, Boston, said managing orders, which is what OMS vendors do, and executing orders, which is what brokers or electronic trading systems do, are two very different functions. While OMS vendors provide access to execution platforms, mainly algorithms, they do not help traders get best execution, which is the ultimate goal, he said.

    "Right now there's clearly a race for (sell-side) brokers to provide algorithms to institutional clients" through the OMS vendors, he explained. Eventually, however, buy-side firms are likely to bypass the OMS and go directly to the broker's trading platform.

    Good position

    Not surprisingly, OMS vendors see themselves in a good position.

    "Providers are in a pretty unique spot. We're probably the most sought-after tool that portfolio managers and traders are using," said Eric Soderberg, vice president of global marketing The MacGregor Group Inc., a leading OMS vendor based in Boston.

    At OMS rival Charles River Systems Inc., Burlington, Mass., Steve Engdahl, director of product management, also thinks OMS vendors can take advantage of the changes in U.S. stock markets.

    "We are following all the same market developments — Reg NMS, the consolidation of ECNs and exchanges, algorithmic trading growth and the continued trend of the reduction in average trade size," he explained.

    OMS vendors need solid technology, flexibility and the right connectivity to algorithms and other trading functions because buy-side traders are increasingly looking for more control over the trading process, Mr. Engdahl said.

    "We have that," he said.

    But others in the industry — namely trading system developers — think that while OMS vendors will maintain their position as trade order handlers, they are likely to get squeezed out of the buy-side trading function.

    Vijay Kedia, president of FlexTrade Systems Inc., Great Neck, N.Y., added that as buy-side traders seek greater control, the desktop computer becomes a more powerful tool for them. FlexTrade develops independent algorithm and other trading systems.

    "As more power shifts to the buy side, the desktop naturally becomes more and more important," Mr. Kedia said, adding the trend might not necessarily play into the hand of OMS vendors because it could decrease the need for buy-side traders to use brokers, which are connected through the OMS vendor.

    "Order management systems make it easy to access broker algorithms but don't make it easy to decide which broker to go to, and many don't have real-time market data," he saidd. "Our systems are connected to end points, to execution points, whereas OMS systems are a way to conveniently send trades to brokers."

    Recommended for You
    sponsored content
    Events
     
     
    Advertisement
    White Papers
    A Great Time to Be Agnostic?
    Shedding the Home-Country Bias
    Automation, lower fees driving institutional interest in factor investing and s…
    WisdomTree Yield Enhanced U.S. Aggregate Bond Fund
    Strengthen Your Core: Flexible Multi-Sector Strategies for a Low-Yield World
    View More
    Sponsored Content
    Partner Content
    How Big Data Delivers Solutions to ESG Investors
    How a Multisector Credit Approach Can Lower Risk, Increase Diversification
    ESG Investing Supplement
    Know Your DB Plan’s ‘Persona’ to Help Make the Right Strategy Choices
    Leveling the playing field for public employee retirement security
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    pilogo-NEW
    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    150 N. Michigan Ave.
    Chicago, IL 60601

    Contact Us

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    Pensions & Investments
    Copyright © 1996-2019. Crain Communications, Inc. All Rights Reserved.
    • NEWS
      • Alternatives
      • Consultants
      • Defined Contribution
      • Frontlines
      • Hedge Funds
      • Investing / Portfolio Strategies
      • Money Management
      • Pension Funds
      • People Moves
      • Private Equity
      • Real Estate
      • Searches & Hires News
      • Special Reports
    • Data
      • Research Center
      • Searches & Hires Database
      • Searches & Hires News
      • RFPs
      • Charts / Infographics
      • Sponsored Research
      • Trackers
    • Insights
      • Opinion
      • White Papers
      • Industry Voices
      • Other Views
      • Partner Content
      • Publisher's Update
    • Multimedia
      • Videos
      • Webinars
      • Polls
      • Slideshows
      • Charts / Infographics
    • Events
      • Conferences
      • Webinars
    • Careers
    • Research Center