Historically, financial services markets have delivered technology-based service on-premises, especially when it comes to trading services. As technology advances and costs come in sharper focus, the industry is more open to consuming even mission-critical services such as trading as a service. With “cloud” architectures now embraced by many sell- and buy-side firms, vendors of execution management systems (EMS) have moved to offer “cloud-based systems.” In reality these are often simply off-premises hosted solutions. However, as our research [Introduction to the Third Generation Platform for Financial Markets, February 2016] has found, a new model–where hosted services are architected to support big data, social media and mobile technology in an agile and flexible way– offers the most promise.
The prior generations were mainframe service delivery which was followed by client/server service delivery. The EMS, though, is the core of the front office, providing market connectivity, market data visibility, and the placing and tracking of orders.
Previous to the offering of integrated service models, the front office was a loosely coupled collection of siloed services. Great effort and investment has been is put into integrating those services, no matter the vendor, with the EMS. The result is cluttered screens, rigid yet fragile workflows, ballooning operational risk, and high costs.
The next generation of EMS is possible because its providers are fully harnessing the power of the cloud – with third-generation platform in mind. For years, cloud computing in finance has been debated, trialled, and half-heartedly adopted. This is no longer the case. The more forward-looking service providers are embracing a fully hosted, cloud-based approach to EMS. The cloud delivery model for EMS does not include the more generic public and
cloud offerings, instead these are purpose built private cloud offerings that are proximate to markets and highly performant, meeting the demands and needs of today’s front offices.