Change Ahead For Canadian Markets

A study of 30 investment management firms reveals that buy-side adoption of advanced order management systems increased by 240 percent since 2003. The report, sponsored by Bloomberg Tradebook Canada Co., Plexus Group and TSX Datalinx, predicts that this will lead to dramatic changes in the way the equity market operates in Canada. In addition, the study suggests that the role of the buy-side trader and the accompanying skill sets also will undergo a transformation.

According to Jackie Chung, the author of the report, 2006 will be a turning point for the Canadian institutional equity market. Currently, less than one-third of Canada's equity order flow is routed via an order management system, while the other two-thirds is submitted to counterparties by phone. E-mail/fax also are used for a negligible percentage. Chung predicts that this will change drastically, and by 2006 close to 60 percent of order flow will be routed via OMS.

"Buy-side traders are looking for new ways to add more value and thrive through this change," Chung says. "Meanwhile, regulators are stepping up pressure on the money managers to prove that they have achieved the best price and best execution for the clients. As a result, nearly 90 percent of the buy-side equity desks plan to use transaction cost analysis tools to assist them to measure and create value in 2006."