A FINOV8 Signals series examining the assumptions, technology architectures and operating models shaping institutional trading.
Back in 2018, at Fixed Income Leaders Summit, Carl James, then at Pictet Asset Management, argued that fixed-income traders didn't need an EMS.
I disagreed.
At the time, I was convinced the buy-side needed better execution tools, connectivity and control. I still believe that. But eight years on, I've come to appreciate something more fundamental in Carl's argument.
Why the trader experience should come first
Why are we still designing the way traders work around the architecture and limitations of an OMS or EMS?
An OMS manages orders. An EMS supports execution workflows and market connectivity. Both provide essential infrastructure, from controls and lifecycle management to authoritative records and auditability.
And in an increasingly AI-driven world, those authoritative systems become more important, not less.
But being a system of record doesn't mean being the centre of the trader's experience, or dictating how the trading desk operates.
From instructions to objectives
Consider how trading actually begins.
A portfolio manager might want to reduce credit exposure, execute a switch, rebalance duration or implement a strategy over several days.
That's an objective, with constraints, alternatives and decisions to be made. It isn't necessarily an order. Not yet.
Yet much of our trading technology assumes the order is the starting point. We organise workflows around it, build increasingly elaborate blotters, integrate market data and analytics, and automate individual stages of execution.
Now we're applying AI and machine learning to make those processes smarter and more efficient. All valuable developments.
But are we fundamentally changing the operating model, or simply making the one we've inherited more efficient?
We've spent decades designing technology around how orders are managed and executed, rather than how trading decisions should be made.
Reversing the design assumption
What if we reversed that thinking?
Start with the mandate. Understand the objectives and constraints. Evaluate market conditions, liquidity, execution choices and trade-offs. Develop a plan. Then use the appropriate systems and market infrastructure to execute it.
The OMS, EMS and trading venues still have important roles. They remain authoritative where they need to be, but become components supporting the trading process rather than defining it.
Perhaps the next evolution in fixed-income trading isn't about building a better OMS or EMS.
It's about rethinking the operating model they've come to define.