Managing the investment lifecycle is becoming increasingly complex for asset managers. Many are realizing that their existing operating models must evolve to remain relevant in this highly competitive market, including the front office and OMS platforms.
Managers with a bespoke OMS (also known as “the infamous black box”) may have little choice but to rationalize this strategy and explore third-party solutions. Meanwhile, it is not uncommon and sometimes unavoidable for asset managers to have multiple OMS platforms to manage complexity across various investment strategies, asset classes, and geographical locations.
While a multi-OMS environment offers flexibility to the front office in the perceived or true absence of a panacea, there is an inherent downside. System integration, data fragmentation, and operational inefficiencies are common challenges. Technology teams running multiple OMS platforms must manage complex integrations, multiple operating paradigms, and various upgrade schedules. Moreover, consolidating trading data to facilitate real-time decision-making and reporting across the investment complex presents its own unique set of data management challenges.
These factors, amongst others, such as total cost of ownership, can be large enough drivers for asset managers to reconsider a multi-OMS strategy. However, while few will argue that a single OMS wouldn’t be ideal, the key question remains – is it feasible?
The answer, of course, is unique to each individual firm, but there are additional considerations beyond the front office that can influence the ultimate decision.
In a multi-OMS environment, asset managers need to determine where and how to best monitor pre-trade / post-trade compliance.
Consolidating to a centralized platform may be a more efficient way for the Compliance team to manage risk, but it could result in added latency to this critically timed process.
Post-trade matching and settlement processes are commonly provided as an extension of the OMS, but capabilities vary amongst them.
Centralizing these critical, time-sensitive tasks and 3rd party integrations onto a single platform can help to streamline investment operations and reduce the technical overhead of maintaining multiple solutions or even a single stand-alone post-trade platform.
As asset managers reevaluate their OMS platforms, it might also be a good time to evaluate how they are aligned with their service providers. The Front-to-Back trend has yielded advancements in interoperability between OMS platforms and IBOR/middle office service providers. Many are positioning themselves to bring efficiencies further upstream in the investment lifecycle, including portfolio management and trading, through the provision and management of data, tools, and services.
Regardless of an individual asset manager’s path, rationalizing a multi-OMS environment or replacing a bespoke model for a multi-asset class manager will involve several compromises. Firms need to be clear from the onset in terms of key objectives and the weighting of various criteria to inform a strategic decision. Olmstead possesses both the expertise and disciplined framework to assist asset managers with this critical decision. Reach out today to learn how we can help position your firm for success.