From the Jan-Feb 2006 issue of Advanced Trading
2005 saw explosive growth in the adoption of third-party, fixed-income OMS applications, which leads to the obvious question: Have these products finally arrived? The answer is, "sort of." As with most things in the asset management industry, the devil remains in the details.
Four years ago, the fixed-income OMS market was comprised by Blackrock for outsourced mortgage support, Bloomberg as an order-entry application, Charles River for those with simple fixed-income requirements and a desire to use a single compliance engine, and Linedata for cash or money market management. Most of the "fixed-income OMS" applications were retrofitted equity OMS applications that jammed bonds into an equity paradigm, or retrofitted treasury-management applications. But the nuances of the fixed-income market all but assure that this wouldn't work for firms with complex requirements.
But vendors have not been sitting idly on their hands. Rather, they have made great strides in enhancing functionality. We've seen separate fixed-income OMS applications; integration with TradeWeb and MarketAxess; data integration with Bloomberg and Reuters to populate securities within the application; tighter integration with fixed-income analytics; and support for a wide range of securities instruments, from credit default swaps to the most esoteric instruments.
Still, there remains a gap between the capabilities of fixed-income OMS applications and the needs of the market. This is recognition that the 80/20 rule applies in spades in the fixed-income market - we spend 80 percent of our time supporting 20 percent of the trades. Every firm has disparate processes, and the nuances and complexities of instruments demand unique workflows. As we look at the current development efforts of the major vendors targeting this space, it is clear that we will undergo a quantum leap in capabilities over the next two years.