Consultants Celent predict that global IT spending on trade order management systems for the fund management industry will reach US$168 million by 2007, a cumulative 2004-2007 total of $523 million.
In a new report, “Asset Management Trade Order Management Systems Update 2004,” Celent examines the buy-side marketplace. It identifies the major trends, and profiles the leading players.
Celent says adoption of order management systems is highest among large financial institutions, and these firms frequently have more than one solution installed. Multiple solutions are the result of legacy systems, acquisitions, varying demands on trading in multiple asset classes, and firm preferences. Small to medium-sized firms are likely to hold off on rapid adoption until industry standards solidify, and the prices of order management systems lower due to an increasing number of providers. Figure 1 shows new IT spending on Trade Order Management Systems, which should reach US$168 million by 2007.
“In the United States and the UK, there are over 9,000 registered investment advisors, and only 1,500 have bought OMS systems from leading providers. A significant number do not generate the trading volume to warrant the purchase of an order management system,” says Denise Valentine, a Celent analyst and author of the report. “Interdependency in the industry is such that true automation of trade execution and settlement requires greater participation in the trading network.”
Although the journey continues to be a slow one, says Celent, trade industry protocols are moving toward standardization, and asset managers chip away at internal straight-through processing.
“In the regulatory environment of today, which calls for greater transparency and stricter, documented internal controls, improved technology in the front-office is a logical conclusion,” says Valentine.
The report profiles Advent Software, Charles River Development, DST International, Eze Castle Software, Financial Models Company, INDATA, Latent Zero, Linedata Services, Macgregor, SS&C Technologies, SunGard, and Thomson Financial.