TradingScreen Continues OMS Expansion on the Buy Side

TradingScreen, which started life as an execution management system (EMS) provider, has been pushing into the buy-side order management system (OMS) space since last year. During this time, it has onboarded hedge funds with assets under management ranging from $250 million to $8 billion onto its OMS, which is part of its overall TradeSmart OEMS platform. 

With that foundation in place, the vendor is now building out new functionality for users around pre-trade allocation, pre-trade compliance, and transaction cost analysis (TCA) reports, says Bernard Ho, head of Asia-Pacific and Japan at TradingScreen. 

On the pre-trade allocations side, it is enhancing the system’s logic to include more parameters and custom-made fields. Traditionally, allocations rely on a rules-based model, with fields for areas such as prime brokers and funds in the account. But if a fund has a multi-prime approach with, say, 10 prime brokers, each with different holdings associated with those primes, users want to be able to “allocate based on a particular position; I want to take the allocations from the prime broker where I hold the most stock position in—that could be one criteria there,” says Ho. 

A portfolio manager might also, for example, see that the average cost of a position in “Prime Broker B” is the lowest of the 10 other primes, so they may want to take that position, as opposed to doing a pro-rata allocation across the other brokers.

“Those are the kinds of additional logic that you can put behind the allocation rule,” Ho explains. “What we’re trying to do now—as opposed to the traditional allocation logic where you would have, let’s say, five sets of parameters that would drive the allocation logic—is we’re exposing a larger set of parameters within our database that clients can use to define how an allocation logic gets derived,” he says. 

Another area TradingScreen is enhancing is for pre-trade compliance. The September release will add an interactive dashboard that will allow compliance officers to quickly identify violations more efficiently. 

Ho says, today, in the compliance portal, violations are viewed on a line-by-line basis. “So, if there were 100 orders that were violated today, they would look at each of those individual line items and say, ‘Okay, that’s what caused that violation there.’ In the new release of the dashboard, we would allow the compliance officer to create a dashboard where they might say, ‘Okay, I want to filter out and look at all the violations for Fund A, as opposed to the entire firm.’ Then they would be able to aggregate all those violations and then decide what action to take,” he says. 

The dashboard will help, especially with more severe violations, where compliance officers need to take corrective action. For example, if in a fund the threshold is only 2% of a particular stock, but now it’s up to 3% or 5%, that is a “pretty severe” violation, says Ho. 

Graphical Representation of TCA

TradingScreen is also enhancing its transaction cost analysis (TCA) reports, to make it more interactive so asset managers have a more graphical representation of the report and the ability to drill down on certain fields in the report. 

Ho says current TCA reports are static, and it’s a ‘what you see is what you get’ situation. 

With the new release, asset managers can run the report and group trades by country or the brokers they used to execute particular transactions. 

“When you view the reports, you can look at all my orders that I traded in Hong Kong, and the brokers I traded with. I can click down on this country, and it would expand the report interactively,” he says.

Many clients want to understand their trading data more so they can improve their implementation shortfalls, or understand why certain brokers’ algos are better than others in certain markets, he adds.

“Clients are definitely trying to understand how they could generate more alpha and have best execution as well. We have definitely seen an incredible, strong interest on the data side of things where clients really want to analyze their data more, compared to, let’s say, two, three years ago, even. I think people are just trying to understand the behavior of some of their traders in terms of their trading styles, and also trying to get the best out of their brokers, too, in terms of execution services,” he adds.