Order management system (OMS)

Most OMSs can integrate with a portfolio management system (PMS) and an execution management system (EMS) provided by the same vendor.

All three types of systems are most often used on the buy-side, at investment management firms and asset managers. They're typically used in the front office of these firms. There are exceptions to this, especially as EMSs are also useful to sell-side firms. Used together, an OMS, EMS, and PMS help investment firms to streamline their trading by providing a tightly integrated suite of tools that provide most of the pre-trade, post-trade, and execution functions that they need.

Many modern OMS and EMS solutions are multi-asset and broker-neutral.

It's easiest to differentiate between an OMS, EMS, and PMS based on five criteria:

• Functionality: An OMS is focused on order lifecycle management, while an EMS is more focused on connectivity to liquidity sources and execution. An EMS may provide execution algorithms, while an OMS does not. A PMS sits above all of this, with core functions such as portfolio valuation, performance attribution, risk analysis, and sometimes accounting and reporting.
• Critical path: An OMS handles middle-office workflows and compliance requirements that are usually off the critical path in a trade, while an EMS handles the real-time execution, is on the critical path, and is sensitive to latency.
• Integration: An OMS sits between an PMS and an EMS, while an EMS is separated from the PMS and receives orders from an OMS.
• Users: An OMS is more often used by portfolio managers and middle-office, while an EMS is used more often by traders and execution desks. An EMS is more useful to a sell-side firm, which may need execution but doesn't require functions like portfolio valuation. A PMS may be useful to family offices, but these firms usually delegate the duties of trading and order routing elsewhere and have less use for an OMS or EMS.
• Pre-trade vs. post-trade: An OMS deals with pre-trade and post-trade workflows. An EMS deals with the real-time trading. A PMS is more focused on high-level, post-trade workflows like portfolio analytics, accounting, and reporting.

In modern trading environments, it has become more common for trading firms and investment managers to build their own OMSs and EMSs rather than relying on a ISV or broker-supplied OMS or EMS.

This results from the convergence of a few demographic trends: AUM has become more top-heavy, and leading firms are finding it more important to compete and differentiate themselves on technology and the automation of their trading operations. Trading venues have also become easier to integrate directly, offering wire protocols and APIs based on popular standards like ITCH, SBE, and FIX.

Since the introduction of early OMS and EMS solutions, there are now also vendors that provide building blocks that have made it easier to implement your own OEMS, such as FIX engines, messaging libraries, order gateways, ticker plants, and market data APIs. Such vendors include Databento, OnixS, Exegy, and others.

When a firm builds their own and all the functions of an OMS, EMS, and PMS come under a single platform, there's usually no need to refer to parts of the trading platform by these terms—instead, the firm may choose to use more specific terms like execution gateway, pre-trade risk, etc.

Often, the exact boundary and separation of duties between OMS and EMS are unclear, leading to the use of the term OEMS. Sometimes, all three functions are integrated into a single end-to-end (or front-to-back) system—this is usually called an investment management system (IMS).

Examples of integrated platforms like these include LSEG TORA, Broadridge, Limina IMS, and Charles River IMS.

Leading providers of OMSs include SS&C Eze, Bloomberg TOMS, and FlexTrade.