In an era of downsizing on Wall Street, more trading and investing firms are opting to manage costs and consolidate workflows by trading in their Order Management System and Execution Management System for an Order and Execution Management System.
Quite often, Charles River Development is the OEMS of choice.
Burlington, Massachusetts-based Charles River has grown organically since its founding in 1984, and as a result its products retain a cohesion that allows them to be deployed across all functions of the investment enterprise, including portfolio management, performance and risk, compliance monitoring, order and execution management, and post-trade processing.
The company has endeavored to become a full-service provider. Charles River Network, for example, provides FIX connectivity to hundreds of trading strategies, broker-dealers, algorithmic offerings, block-trading desks, equity, fixed income and FX trading destinations. Charles River Managed Services provides fully-outsourced services for hosting, application management, FIX connectivity, integrated data and compliance services.
“The Charles River Investment Management System is not just about software,” said Tom Driscoll, global managing director at Charles River. “It’s a complete solution that combines software, a FIX network, hosting, application management, and data. That’s a big differentiator.”
Charles River IMS is “the only OEMS that’s a single system,” Driscoll told Markets Media. “Almost every other product in the marketplace has resulted from a merger or other business combination, in which one company with an EMS acquires one with an OMS. As a result, you end up with systems that aren’t well integrated, and which create workflow and usability issues.”
Since 2005, “we’ve completely re-architected our products to an N-tiered service-oriented architecture to ensure we have the right technology for an OEMS,” said Driscoll. “We have 150 of our 350 clients on this new architecture,” including one customer with 4,600 users, he said.
A tightly integrated system is mandatory for today’s fragmented, highly electronic market, in which the front and middle offices need to be in sync and operate in real time.
“Traders are working orders in multiple electronic venues or with brokers, while simultaneously, portfolio managers require visibility into what’s happening and often want to request changes to their orders,” Driscoll said. “Because we’ve created a single system, both the trader and the portfolio manager are always on the same page.”
For the portfolio manager, Charles River Manager—a component of Charles River IMS—consolidates portfolio management activity into a central workspace for asset allocation, model building, order creation and visibility of trade execution.
Years back, “a separate EMS and OMS were thought to be better since many OMSs used older technology and you can’t take an old system and just cobble EMS functionality onto it,” Driscoll said. “The technology that we’ve employed has enabled us to develop an architecture that works equally well across order management and execution management.”
Developing and maintaining complex systems requires substantial resources. Charles River earmarks 20% of annual revenue to research and development, to support requirements such as high volumes for large firms combined with simplicity and packaging for smaller firms. Charles River has more than 600 people focused on the front office and middle office.
“In 2012, we spent over $40 million on R&D, and added 24 new clients,” Driscoll said. “We were also able to expand our presence in multiple verticals, beyond our traditional institutional base, including hedge funds and wealth management; we also introduced Charles River Mobile, which runs on both iPads and Android devices.”
“The technology that we’ve employed has enabled us to develop an architecture that works equally well across order management and execution management.” Tom Driscoll, global managing director at Charles River
Charles River IMS provides standard interfaces to middle-office (post trade processing and settlement) and back-office (accounting, fund administrators, custodians, etc.) systems.
Customers can use Charles River’s post-trade capability for middle-office processing and can plug into other venues.
“The post-trade module is used to match the executions and allocations with the brokers and custodians and to communicate the settlement details to downstream systems,” Driscoll said.
That, together with the platform’s message-based APIs and exposed Web services, creates real-time integration with back-office systems, data warehouses, message hubs, settlement facilities and custodians. “When a client decides to use one of these standard interfaces, the effort mostly includes configuration and testing,” Driscoll said. “If the client needs a non-standard interface, Charles River can provide customization and testing, but it’s not recommended.”