Thanks to changes in market structure and the emergence of fixed income as equities trading has lagged, nearly one-third of head traders inside buyside firms are looking for a new order management system (OMS) or execution management system (EMS).
According to a new report from market research firm Greenwich Associates, 30 percent of the head traders interviewed at 486 buy-side institutions say their firms are considering a change in the providers of their OMS and EMS.
Across institution types, the trend is stronger among investment managers (35 percent) than hedge funds (29 percent). Among investor types, fixed-income investors (39 percent) are more likely to explore new systems.
Although the perpetual search for an edge in seeking investment returns largely drives the need for new systems, alterations in market structure brought on by new regulations have become an equally significant driver, according to a Greenwich Associates statement.
Regulations are reshaping the way fixed-income derivatives are traded and cash markets face a major evolutionary step with the buy side now holding the majority of the inventory and, therefore, the power, said Kevin McPartland, head of Greenwich Associates Market Structure & Technology.
He added,This is in large part why a significant amount of fixed-income investors plan to look for a new system in 2014.
Not every trader is unhappy with their tools. Eze Software Group and Instinet received the highest EMS marks from the Greenwich Associates study participants for overall quality of their EMS. Participants in the study also rated BlackRock, Bloomberg and Charles River Development highest for overall OMS quality.
Download the Greenwich Associates report here.
