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Five Questions Every Head Trader Should Ask Their EMS Provider

Data Science and Technology

By John Adam  |  June 1, 2020

As the buy-side navigates uncertain operating conditions arising from a global pandemic, I have had the opportunity to speak with several clients and prospects about how they've adjusted and their ongoing needs. I'm continually impressed with how well the institutional trading communitybuy-side and sell-side professionals, technology experts, and data providershave come together and risen to the current challenges.

In addition to finding out just how hard it is to home school my nine-year-old on fractions, I've had time to consider some great questions head traders have asked me (or hopefully will ask me) in the times ahead. My answers are as follows.

1. How Can You Train and Support My Desk Remotely? 

While FactSet's front office implementation and support team would take issue with me saying that 100% remote deployments for new firms is “easy,” it's certainly been both feasible and invaluable during a global pandemic with so many logistical challenges. The technology teams at FactSet have been able to partner with clients to assure that new users can be trained and that system upgrades are possible when working remotely. FactSet's client team is intensely customer focused and the time it spends with users on-site is invaluable; however, it's also essential to provide that same level of service remotely during a crisis such as this and it's definitely worth mentioning that in the three months since the pandemic began, FactSet has implemented three funds remotely. 

2. How Will Your System Enable Me to Achieve My Trade Automation Goals for Multiple Asset Classes?

Low-touch and no-touch trading have fully entered the mainstream and are no longer the exclusive domain of equity trading. It's not uncommon for a trading desk to be "goaled" on what portion of their order flow can be executed without the trader touching the order at all. Your execution management system (EMS) provider should have simple and intuitive controls to identify the orders best suited for low-touch/no-touch trading and match those orders to the brokers best suited to execute them without trader intervention. Updating these rules and modulating broker selection based on performance should be easy to drive from trade history and broker scorecards. 

3. How Can You Configure Your EMS to Match My Trade Workflows Without Custom Code?

Custom coding, particularly for integration of the EMS and an in-house developed application, will always have a place in the trading-desk technology landscape. Regardless, custom code shouldn't be necessary for delivering bespoke workflows. When overused, it can lead to challenges with upgrades and standardization that can ultimately slow down the process of rolling out new functionality. Instead, the EMS should have configuration options that match the asset classes you trade. It should also have pre-configured adapters to your OMS and other components of your portfolio-lifecycle solution. This is one way that funds can achieve substantial operational efficiencies. 

4. Can You Explain Your Technology Partner Strategy? 

FactSet's Front Office Solutions deeply believes in supporting an open and interoperable portfolio lifecycle. There is simply too much innovation happening across multiple asset classes for any one vendor to provide all the solutions that a buy-side trading desk requires.

Whether it's for transaction cost analysis (TCA), machine learning, data science, or any other value-added service, your EMS must be able to provide an open and interoperable workspace for your traders. Working with technology partners' APIs and providing them with access to FactSet is an essential part of delivering what you expect from your EMS provider. We are continually assessing the market and reaching out to partners that add value to FactSet's offering and we prioritize these integrations based on where you tell us you see innovation and utility for your desk.

5. What Would a Bank or Broker Say About Working with You? 

The partnerships between OMS and EMS vendors and the sell-side have been vital to the widespread adoption of electronic trading, which has become even more essential in volatile markets. The pace of innovation, particularly in foreign exchanges and fixed income, continues to accelerate as more execution workflows become electronic. It's critical that your EMS provider has productive and transparent relationships with your brokers; this will ensure you have the most current versions of their electronic trading capabilities resident in your EMS.

My colleagues would likely tell you that once I start talking about trading technology, I could out-monologue the average Bond villain. Regardless, I'm excited to see the institutional trading community continue to innovate and rise to the challenges we're all facing together. Buy-side traders are doing amazing things with technology and automation to improve the portfolio lifecycle. I look forward to being part of that dialogue and seeing what comes next.

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John Adam

Senior Vice President, Head of Portfolio Management and Trading Solutions