Electronic trading systems drew the world’s attention during an intraday liquidity meltdown May 6. Researchers at TABB Group have had trading systems on the brain for months, and now in a new study they have identified the specific systems likely to be found at the largest buy side trading desks.
The study, which will be formally released later this month, asked 118 asset management firms, roughly half of them tradition pension and mutual fund managers, what kinds of Order Management Systems and Execution Management Systems they utilize.
TABB’s Kevin McPartland, senior analyst in charge of the trading study, which has been done two times prior, in 2006 and in 2008, stressed it was not in a position to recommend any system over another, or award star ratings, but in taking a snapshot of buy side trading trends TABB found a number of platforms which seem to dominate.
Here’s a rundown:
In the OMS space the mentioned systems included those provided by BNY Convergex (EZE Castle), Charles River, Fidessa (LatentZero), ITG (Macgregor) and Linedata. Usage differed between traditional asset managers and hedge funds.
For example, the Charles River and ITG OMS platforms were most favored by traditional, long leaning money managers, which accounted for roughly half of TABB’s 118 survey respondents while EZE Castle was more prominent with hedge funds.
“The OMS space by its nature only involves a limited number of players so it’s not surprising that these firms dominated,” McPartland explained.
The EMS space, on the other hand, is vastly more competitive. Every broker or bank peddling an algorithmic strategy or dark pool capability is giving away an EMS, or rather bartering it for the prospect of eventual commission dollars. And there are EMS products that are sold independently.
Bank of America’s Instaquote, Goldman Sachs’ RediPLUS, Instinet’s Newport, ITG’s Triton, JPMorgan’s Neovest, and Morgan Stanley’s Passport were all mentioned in terms of EMS products provided by brokers. Bloomberg’s EMS is also increasingly popular among non-broker providers, as most money managers already have a Bloomberg informational connection on the trading desk and hence have access to the system at no additional cost. “Bloomberg has a captive audience,” McPartland said. “They’re continuing to improve their capabilities.”
EMS products that are neither offered by Bloomberg nor banks/brokers need to be the cream of the crop as they cost hard dollars and are not embedded on the trading desk by default. Flextrade, Inforeach, Portware and Realtick all fall into this category and were used by TABB’s study participants.
TABB’s full report is due out in a few weeks, and McPartland’s colleagues are also working on snapshots of the options and futures platform worlds.
Rich Blake is a New York City-based freelance financial journalist. He currently contributes to Institutional Investor magazine, Reuters HedgeWorld and ABCNews.com, among others.
