Stakes to Play

Not so long ago, buy-side firms armed with trade-order-management systems were considered state-of-the-art, tech-savvy shops that knew how to leverage technology to their advantage. Today, that perception is falling by the wayside, as having an OMS has become a prerequisite to doing the business of investment management.

Shops of any mentionable size are finding a depressed economy is forcing them to be more accountable to clients, who are demanding to know the performance of their investments relative to the appropriate benchmarks. Without the technological advantages an OMS can offer, portfolio managers and traders are finding themselves hard-pressed to justify their performance. That means clients are more apt to take their money elsewhere - usually to a shop that can produce the sophisticated reports, and engage in the finely tuned compliance, that an OMS can facilitate.

It is becoming apparent that buy-side firms lacking an OMS had better think twice about their manual ways. To that end, it is probably a good idea to check out our Vendors in the Marketplace story, which can provide a non-exhaustive sampling of some major players in this space. The result may be finding a vendor that can double as a long-term strategic partner.

If you do use an OMS, the Big Picture story clearly illustrates that many proactive firms are not throwing good money after bad, but using opportunities (such as their vendor's request that they upgrade software) to hit the market. At very least, most investment-management firms wind up verifying they are on the right track but, more often than not, opt to make a change.

Whether you're in the first or second category, this supplement will prove a useful tool in understanding what buy-side firms, and the vendors attempting to service them, are up to. Such knowledge is critical because, regardless of winning the hand, having an OMS is now required just for a seat at the table.