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Acquisition Spree Shaking Up Mature World of Buy-Side Trading Trading Systems

Traders Magazine Online News, April 2, 2019

John D'Antona Jr.

After a decade of slow and steady change, the order and execution management industry is primed to get exciting once again. Trading system providers in aggregate have spent nearly $10.5 billion on seven major acquisitions since 2015, a clear demonstration of the opportunity presented by the buy side’s increasing demand for technology.

A new report from Greenwich Associates, Buy Side Reacts to Trading System Acquisition Spree, analyzes the impact of these transactions, and what providers need to do to capture their share of the $1.4 billion buy side trading desks spend on order and execution management systems (OMS/EMS) each year.

“These providers are fighting for a limited client base that, on average, only changes providers once a decade,” said Kevin McPartland, Head of Research in Greenwich Associates Market Structure and Technology Group and author of the new report.

Integration of newly acquired products with existing ones will be critical to the success of the largest providers going forward.

According to McPartland, the recent acquisitions are a result of the industry tackling the costly problem of inefficiency in trading technology systems. “The trick is to allow innovation while still limiting the risk that one small bug shuts down an entire trading desk,” he says. “You have to change the tires while the car is still moving.”

Despite the low switching and turnover rates in the business, the report suggests that large providers and startups who offer truly innovative systems and superior service can find opportunities to expand their market share. “The most used and most liked platforms aren’t always the same thing,” says Kevin McPartland. “That shows the potential for change.”


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