By Rob Keller (pictured), CFA, Executive Managing Director, Product Management and Development, Eze Software Group – In today's world, increased regulatory pressures make collaboration between compliance and trading departments critical. The growing demands of compliance departments for pre-trade checks can potentially disrupt workflows and take valuable time away from trade creation and execution. According to TABB Group, many investment managers have issues with their current pre-trade compliance technology setup. Many firms have trading and compliance in disparate systems resulting in inefficient and slow trading workflows. These inefficiencies are driving the demand for tighter integration between execution management and order management systems.
Order entry and operation within a single application
Compliance departments at investment firms are increasingly aiming to integrate compliance into their investment workflows to identify and mitigate potential issues earlier in the investment lifecycle. For many, this has been tough to achieve, as compliance and trading tools often reside on separate systems. The order is created in the order management system, where positions are checked, allocations processed and compliance runs, from there it is staged into the execution management system.
At this point, the workflow in one system ends, and moves over to the other system; should the order have to be adjusted, the trader must swivel from the EMS back to the OMS to make the change and back again. This is inefficient and can cost the trader time and money while away from the market.
Eze Software has eliminated the need to swivel between systems by integrating the pre-trade compliance and allocation capabilities in the OMS with the advanced execution capabilities in the EMS.
Synchronisation of security data
In order to manage trading and compliance efficiently, firms need a single trusted view of their orders and positions. Relying on disparate systems that don't integrate until the end of the day makes it difficult to look over the entire portfolio and manage risk accordingly. Moreover, various jurisdictions now require firms to run accurate real-time exposure, counterparty exposure and beneficial ownership disclosure, and adjust positions accordingly throughout the day.
The earlier these violations can be detected, the easier they are to fix – but in order to do this efficiently, data across systems has to be synchronised. Trying to synchronise different data structures can be difficult and time-consuming if you are stitching third-party systems together.
Easy access to advanced execution management functionality
Compliance may present great demands upon the trading desk for position checks, pre-trade compliance, and other business requirements, but traders are reluctant to devote more time to running compliance than necessary. Scenarios that force traders to choose between robust compliance engines and advanced trading capabilities put the trader between a rock and a hard place. The ideal trading and compliance solution will ensure that traders have access to position checking, pre-trade compliance, staged order edits, child order edits and list creation within the EMS – an environment they can exploit with the least disruption to their workflows.
With growing regulatory pressure on trading and compliance, it's becoming difficult for investment firms to piece together the required data. Having an integrated solution with centralised, synchronised data, without cutting down on advanced trading capabilities, will help.
*Scher, Dayle. (2016, March 30). Trading Technology and the Pursuit of Alpha [Webinar]. In Tabb Forum Webinars. Retrieved from <http://tabbforum.com/webinars/trading-technology-and-the-pursuit-of-alpha?ticket=ST-14616025069445-SdZucWdxuVSb1Zn7HqrVseLXG4BoP2xg6FGEQVKl>
