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November 1, 2001

Order Management Makes Most Waves: Traders Choose Favorite OMS Vendors

By Brian O'Connell

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  • Order Management Makes Most Waves: Traders Choose Favorite OMS Vendors

Some traders are creatures of habit and balk at new technology.

But one area of technology that seems to escape this technological paranoia is order management systems (OMS).

"OMS is the hottest issue for traders on the buyside and the sellside," according to Bob Iati, an analyst at TowerGroup, the Needham, Mass.-based consulting company.

That's why financial software vendors are clamoring to provide the three critical components of an OMS: position management, order routing and data management and design.

"Traders live and die by their order management systems," Iata said. "There is no shortage of vendors to provide them with solutions. I call it the mission control' of the trading desk."

Most OMS vendors aim to provide split-second trade routing to a single venue. That venue is typically designed to offer both the best execution and the best sellside and buyside integration.

Two vendors stand out in the crowd, according to Iati. They are SunGard's BRASS and Royal Blue Financial's Fidessa OMS systems. These are the OMS' most widely used by traders, he said. He said they offer the best chance of providing the three critical OMS components a dealer needs.

SunGard is capitalizing on brand name and product with the June, 2001 release of its PowerNet. This could be a direct threat to Nasdaq's SuperSOES, SelectNet and other direct access programs, according to some observers.

Billed as the first independent equity order delivery network for securities dealers offering direct access to multiple market centers, SunGard officials say that PowerNet delivers orders for execution of all types of equity securities. The destinations include ECNs, market makers and other trade execution venues.

The software also provides direct access to ECN limit order displays and market maker quotes. It gives traders complete views of the limit-order displays of participating ECNs.

"PowerNet provides a single point of access to execution systems of all types of equity securities worldwide," said Tom King, president and chief operating officer, SunGard Trading Systems/BRASS.

King cites former SEC Chairman Arthur Levitt's call for "all market participants to move toward open books" through a "voluntary private sector initiative."

The SunGard executive said it is clearly preferable to link competing liquidity centers than to attempt to regulate market competition. But not so fast, counters London-based Royal Blue Financial. Its Fidessa OMS nipped BRASS in a recent TowerGroup OMS performance comparison.

Open System

"Both products are well made and well known, but I'd give Fidessa the nod because of its open architecture," said Iati, after he tested "hundreds" of different functions in both applications. He adds that Fidessa's frontoffice and backoffice data functionality performed better than BRASS. Still, BRASS had better compliance features, he contended.

"Fidessa was easier to integrate, had better communications between the buyside and the sellside, and offered better routing services," Iati said. "BRASS can operate in a more proprietary fashion that other systems. While a Royal Blue type system will route your trade to wherever it needs to go, BRASS may capture some trades but not send them along for execution. I'd say they route 70 percent of trades to the appropriate exchanges."