[ S U R V E Y
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E X E C U T I O N
M A N A G E M E N T
S Y S T E M S ]
COMPLIANCE
– THE NEW
BATTLEGROUND?
With MiFID II looming larger, EMS vendors set out their stalls.
U
nlikely as it might seem, the new battleground
in the competition to develop the most effec-
tive execution management system (EMS) is
Compliance. MiFID II has long been touted as the final
solution by which regulators would control the way that
investment managers interact with brokers. A combi-
nation of breaking the informal relationship between
research and commissions, coupled with the need to
demonstrate best execution on all transactions, quite
simply changes the basis of trading. Whether this will
result in better outcomes for investors is a debate that
can never be resolved. What matters now is that rules
will very soon be in place and everyone will need to
follow them.
EMS providers have always prided themselves on
being nimble and responsive in matching the ever
evolving needs of their buy-side trader customers. It
is therefore not surprising that they have almost all
embarked on delivering a set of solutions to the compli-
ance issues now confronting trading desks.
FlexTrade, ITG and TradingScreen have all put their
MiFID II capabilities front and centre on their websites
in the build up to implementation. Other firms may
be less overt in establishing their credentials in the
compliance arena, but no one can ignore the changing
environment. Liquidity discovery, broker and exchange
connections, asset class coverage and latency can
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TheTrade
Autumn 2017
all now be viewed through the prism of compliance
impact.
At heart however, most traders want to be seen as be-
ing about more than simple compliance with the rule-
book, important as that may be. They regard themselves
as an integral part of the investment process, with a
direct and positive impact on overall investment perfor-
mance. On this view, making the best decisions about
where and how to work a particular order has subjec-
tive as well as algorithmic components. The future will
determine how these various factors change the role of
trading and traders, both buy-side and sell-side. Howev-
er, even in the results of the 2017 Survey the compliance
context cannot be avoided when assessing results.
Figure 1 shows the scores seen in the Survey in each
of the last three years. In general scores remain good
and imply that clients are generally satisfied with the
services they receive. With the exception of a single
category all thirteen aspects of service being evaluat-
ed scored above the 5.0 (Good) default level. The one
exception was Product Development. Here scores were
down by 0.23 points compared to 2016 reverting back
to levels seen a couple of years earlier. Not everyone has
concerns in this area. Of the responses received almost
15% indicated that there was nothing they could think
that they needed. A significant number also indicated
by omission, a lack of interest about enhancements.