FIGURE 6: ASSET CLASSES TRADED
Asset Class of Respondents
2014 2015 2016 2017
Equities 96.8 92. 4 85. 6 85. 3
ListedDerivatives 59.2 63. 6 56. 7 54. 6
Fixed Income 26.1 35. 6 20.0 25. 4
ForeignExchange 36. 3 41. 5 33.0 35. 4
Other 3. 8 5.1 4.2 3. 5
FIGURE 7: T YPES OF EMS USED
Type of Respondents
2014 2015 2016 2017
Single Multi Broker/Multi Asset 38.1 47. 5 47.0 50. 7
Multiple Single Broker or Single Asset Class 23. 3 33.1 29. 8 31.0
Links from OMS to Brokers 26.0 37. 3 22. 8 25. 7
Direct Links to Execution Venues 12. 6 20. 3 12.1 13. 3
> $50 Bn 1.81 1.74 2.06 2.38
Survey respondents were asked to provide a rating
for each Execution Management System (EMS)
provider on a numerical scale from 1.0 (Very Weak)
to 7.0 (Excellent), covering 13 functional criteria.
In general 5.0 represents the ‘default’ score of
respondents. In total more than 300 individuals
responded; more than 500 evaluations were
submitted; and more than 15 providers were evaluated. The evaluations were used to compile the
nine Provider Profiles covering the major providers
based on responses received. Each evaluation was
weighted according to three characteristics of the
respondent; the value of assets under management; the scale of business being conducted electronically; and the number of different providers
being used. In this way the evaluations of the largest and broadest users of Execution Management
Systems were weighted at up to twice the weight
of the smallest and least experienced respondent.
In arriving at any overall calculations, the scores
received in respect of each of the 13 functional
capabilities were further weighted according to the
importance attached to them by respondents to
the Survey. The aim is to ensure that in assessing
service provision the greatest impact results from
the scores received from the most sophisticated
users in the areas they regard as most important.
Finally it should be noted that responses provided
by affiliated entities are ignored and a few other
responses, where the respondent was not able to
be properly verified, were also excluded.
Figure 5 shows that size is not significant in determining the number of EMS systems being used by
buy-side traders. Just over one-quarter of respondents were from very small firms and while their use
of multiple systems was less than very much bigger
managers, the differences were not that material.
Smaller firms have less need to integrate and therefore can quickly install new stand alone capabilities.
Larger firms, who have to integrate internally to make
the process beneficial appear to be much more careful
when choosing suppliers and cannot afford to maintain too many.
The growth breakdown of asset classes being supported through use of EMS capabilities is shown in Figure
6. In relative terms, both fixed income and foreign
exchange showed greater penetration. However all categories are lower than in 2015 in terms of the percentage of mentions. It would appear that some traders have
decided that the initial promise of electronic trading
using EMS services may not have been suitable for their
particular activity. This is a trend that purveyors of
multi-asset class capabilities need to manage carefully.
However, as Figure 7 shows the use of multi-broker,
Overall 2017 represents a year of solid performance
from EMS vendors taken as a whole. As the industry
continues to mature, further consolidation is likely but
not certain. The penetration of large sophisticated asset
managers is now as great as that of hedge funds, which
means fewer opportunities to grow customer bases fast
and places emphasis on high quality support, both in
product development and general service reliability.
Whether an emphasis on compliance actually changes
anything significantly remains to be seen. However
there are certainly providers who are betting that it will.