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October 14, 2008

EMS Continues Featured Role

By James Ramage

The future of the execution management system is bright. Rumors of its imminent merger with the order management system have been premature.

If anything, the stand-alone EMS will be around at least for the near future, because it continues to adapt to fit new needs, according to the latest report on the EMS by the Boston-based consultancy Aite Group. The EMS's role will continue to focus on increased global and multi-asset functionality, as well as risk management tools.

EMSs and OMSs should maintain their separate functionality over the next five years or so, concluded Matt Samelson, the report's author. EMS vendors might be incorporating some OMS functionality, and vice versa, but the technology for a complete fusion of the two systems won't be available for some time.

Furthermore, an EMS developer "that chooses to devote precious capital and development resources on a scale necessary to successfully enter and compete with well-entrenched providers in the OMS market segment runs a considerable risk of losing focus and weakening its core offering," Samelson said.

The report also noted that during a recent 18-month period traditional asset managers' usage of the EMS has grown substantially. The reason? They are using riskier strategies-ones they would have deemed too dangerous just a couple of years ago. As a result, they've become the fourth-biggest users of EMSs, behind hedge funds, traders managing private money and broker-dealers.

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