Order management systems are not able to cope with the specific complexities of counterparty restrictions in modern regulations, according to Fidessa.
The software and services firm made the claim in a whitepaper exploring the challenges of counterparty risk.
Steven Strange, Fidessa’s compliance product manager, authored the paper and explained counterparty risk is more complex than ever, as regulators expect firms to aggregate their counterparty risk across asset classes.
The complex nature of counterparty risk requires a sophisticated OMS system, but the whitepaper insists OMS systems “aren’t up to the job.”
Strange wrote: “Buy-side firms now need a system that offers the required assessment capabilities and provides the flexibility to add and alter rules, lists and calculations during business hours.”
Fidessa is not the first to make such a claim. Technology firm Oracle published a whitepaper back in 2012 and said OMSs cause more problems than solutions.
The paper said: “The existence of multiple, poorly integrated order capture and fulfilment management systems, multiple channels to market and no enterprise wide oversight or control over orders causes many problems: high costs, barriers to growth and poor customer service.”
Fidessa concluded that the complexity of counterparty risk, even in the age of automated reporting, is putting a strain on buy-side systems.
CLARIFICATION: This story has been updated at the request of Fidessa. An original version of the story stated that the whitepaper claimed order management systems are "not good enough to cope with complex regulation". Fidessa requested that this story was updated to underscore that this related to "the specific complexities of counterparty restrictions". The text has been amended accordingly.