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Achieving OMS Modernization

Sell-side firms should embrace a flexible, phased approach.

Today’s sell-side firms are facing a wide range of economic and competitive pressures. Forced to contend with growing volumes, shrinking margins, client adoption of multi-asset strategies and technological innovation across the landscape, broker-dealers are increasingly finding that their existing order management systems (OMS) are not up to the task.

Why not? It boils down to a lack of modernity and flexibility. Legacy systems are often quite limited in terms of the depth and breadth of their functionality, depressing performance and requiring multiple platforms. They might be adequate for getting through each trading day, but they lack the capabilities required to truly deliver for clients and rapidly evolve a business.

Let’s zoom in on some of the key attributes of a successful OMS modernization and why they matter.

  • Modern – Speed and scale are crucial success factors for any OMS. In addition, modern sell-side firms require a wide range of capabilities – not just for trading, but risk, compliance and other operations too – as well as automated processes and easy, intuitive experiences so that users remain happy, precise and productive. Delivering this level of performance, flexibility, and user-friendliness requires the latest in modern technology.
  • Multi-Asset – Between increasing competition, buy-side diversification efforts and the electronification of non-equity markets, there’s no shortage of trends driving sell-side firms to trade not just equities and ETFs, but also fixed income, derivatives, foreign exchange and even crypto and other alternatives. Maximizing efficiency means having a single point of access and connectivity to a wide range of exchanges, venues and counterparties, as well as systems that can integrate with and support asset-class-specific tools and functions.
  • Multi-Workflow – To maximize employee productivity and achieve vendor consolidation, the ability to support a full spectrum of high-, low-, no-touch, and risk workflows is key. This has become especially important amid the rise of high-touch desks with low-touch components. As sell-side entities become less bifurcated along these lines, their systems must evolve in kind, with once disparate features accessible via the same platform. This has also increased the importance of desktop integration and APIs which allow for unified workflows and user experience. The ideal system should bolster these complex and critical workflows through interoperability and an integrated framework across products, creating a unified workspace for banks and broker-dealers.
  • Global – As the competitive environment continues to intensify, sell-side firms have more incentive than ever to pursue worldwide expansion. To do this successfully, they must have front-office technology that can support a global organization, complete with regional- and jurisdiction-specific workflows, distributed and scalable architecture, unified views, localized expertise and on-the-ground support in a wide array of countries.

Many broker-dealers are aware they need these capabilities to optimally carry out their strategies and pursue their business goals, and that legacy systems cannot deliver them. But realizing that vision is far easier said than done. When it comes to technology as intricate and essential as an OMS, change can take a long time and be very costly. With inflation on the rise and dim economic projections for the months ahead, many executive teams are reluctant to approve this kind of wholesale change. What’s more, many legacy providers intentionally make it difficult for their clients to untether themselves, locking them into one-size-fits-all systems with expensive, bloated software and unneeded capabilities.

Broadridge OMS offers a better way. Our solution is multi-asset, multi-workflow and global, delivering all of the battle-tested technology, granular workflow capabilities and specialized support to trade virtually any asset class in any region – but these aren’t the only differences. By building our system on a modular software architecture based on independent components, we enable clients to take a phased approach to OMS transformation, prioritizing specific functions as appropriate.

Interoperability is becoming a business imperative, so our OMS integrates with our automation products and incorporates complementary principal workflows. This creates a unified workspace allowing traders to better seek liquidity for their clients by leveraging position management, FX hedging, market making, RFQs, smart order routing or utilizing systematic internalizes for matched trades. 

This results in a solution that meets clients’ exact needs, helping them reach their goals with far more flexibility and precision than other vendors. They can focus on a single aspect of their workflow at initial implementation and easily add additional functionality down the line or integrate proprietary or third-party tools to supplement our system.

Every firm is unique, so there’s no single right way to leverage these capabilities. That said, many of our clients have taken a general path to ramp up incrementally over time, and thereby avoid overwhelming users with too much change at once. This approach is one way that broker-dealers can evolve their business at whatever pace they wish, gaining access to transformative technology while maintaining flexibility and ultimate control. Here are the steps:

  • Step 1: Migrate FIX Solutions – Seamless communication is a foundational element of our platform. Our order routing network supports over 33 million messages each day. In addition, we offer a Connectivity, Onboarding and Monitoring Service (COMS), providing convenient access to global execution venues, message normalization and more.
  • Step 2: Migrate Middle-Office Solutions – It’s essential to have operational capabilities up and running before facing the markets. We offer centralized bookings, allocations, confirmations and trade compression, with support for all major post-trade communication channels.
  • Step 3: Migrate Market Connectivity – Once the ability to process trades is in place, it’s time to start trading. We offer low-latency connectivity to over 150 exchanges and trading venues.
  • Step 4: Migrate Low-Touch Flow – Because there are fewer manual processes involved, it’s often easier to migrate low-touch order flow first. We offer powerful smart order routing, integration to liquidity-seeking strategies and strong exception management capabilities.
  • Step 5: Migrate High-Touch Flow – Once all the other elements are in place, it’s time to bring high-touch order flow into the system, complete with market making workflows, position management and a wide range of tools to demonstrate best execution.

There’s no need to undertake these processes in a strictly linear fashion. Many firms take the approach of migrating FIX, market connectivity and low-touch flow simultaneously, while others prefer a big-bang approach, which can be disruptive and intensive but ultimately accelerate timelines. The point is that the decision is in the client’s hands.

When it comes to OMS transformation – or any form of change management – this level of autonomy is invaluable. It means sell-side firms can pursue modernization and simplification in a way that best meets their needs, migrating onto a new solution while also consolidating across asset classes and workflows. This incremental approach unlocks the ability to solicit input, assess performance and make adjustments while closely managing risk and cost – and it’s only possible through a modular system like ours.

Interested in learning more about how Broadridge OMS can transform your sell-side business? Drop us a line.

Let’s talk about what’s next for you

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+1 800 353 0103North America
+65 6438 1144APAC