TS Imagine Team at SimCorp IUCM 2022
A team from TS Imagine recently participated in SimCorp’s 3-day International User Community Meeting (IUCM), an annual event that we are happy to say was in-person (not virtual!) this year. The IUCM attracted over 500 clients from around the world and gave TS Imagine a great opportunity to spend a few days with representatives from SimCorp, further strengthening our strategic alliance.
In addition to networking with the attendees (and enjoying good food, indulging in some favorite beverages, and even finding our way onto the dance floor), we presented some of the latest features that are available as a result of the sophisticated connectivity that has been established between TS Imagine TradeSmart, a world leading Order & Execution Management System (OEMS) and SimCorp Dimension Portfolio & Order Management System (POMS).
The audience was extremely receptive and after the formal presentation we had an opportunity to meet with many of the attendees to discuss OEMS integration and our unique alliance with SimCorp. Our complements to the overall SimCorp team, for hosting this amazing and well-executed event. Special shout out to Chris Parry, Marc Schröter and the SimCorp marketing team.
For those who were not able to attend the event, we offer this summary of the history, rationale and benefits of the TS Imagine/SimCorp alliance.
Why form this alliance?
Since the separation of execution management systems (EMS) and order management systems (OMS) over two decades ago, the two have grown increasingly further apart in terms of functionality and integrations. OMS functions can be looked at from an active versus passive lens, where the passive part leans towards processing and integration into the portfolio management workflow and the active part integrates with the execution domain of the EMS.
The disparate tasks involved in different areas of asset management create challenges (and frustration) when firms try to get the various systems that handle those different functions – namely, their portfolio management, order management and trade execution systems – to interact smoothly. TS Imagine and SimCorp formed our unique alliance almost five years ago to address those challenges.
Historically, the market has been largely reliant on the Financial Information Exchange (FIX) protocol to address the need to manage this type of system integration. The FIX protocol enables communication but as a market standard tool that was designed to aid electronic communication between buy-side and sell-side, it is limited in integration and scope and has a number of shortcomings. A standard FIX integration does not allow for reporting of importation elements such as live counterparty exposure, compliance information or cost analysis on a pre-trade basis.
TS Imagine’s clients, representing a multitude of diverse investment strategies and needs, are heavily focused on trading that depends on fast, accurate execution, flexible liquidity sourcing, access to data, and stability/resilience. Our OEMS, TradeSmart, is stress-tested to meet the needs of a trading desk that does up to one million trades per day, in an environment where the margin for error is basically nil.
SimCorp’s Dimension platform supports its clients through the core investment cycle, with a strong focus on bridging the gap to middle and back office. The emphasis is on portfolio management, compliance and maintaining the investment book of records, and those clients need a portfolio and order management systems that can handle massive amounts of data, analytics and stress-testing and meet IBOR requirements.
Best-of-Breed is easier said than done
When these systems operate independently, portfolio managers send orders to the OMS and traders then log into the system to see what to execute to achieve desired exposure, using a manual process to send the orders to an EMS. It is not too far from scribbling the orders on a pad of paper and entering them one by one. This inefficient process might be tolerable for some asset managers who put aggregated trades through an OMS only a few times a day, but for most firms, especially when looking at the scale of asset management today and an increasingly volatile market environment, this process is highly inefficient and the potential for alpha slippage or loss of data is substantial and very real.
But there is more to protecting alpha through trading than just improving the way orders are routed to brokers by connecting an OMS to an EMS. Firms want an EMS that can efficiently access diverse sources of liquidity, using various order books, trading algorithms, dark pools and alternative platforms. When TSI and SimCorp started talking five years ago, existing connections between OMS and EMS, including those created by the “industry leaders”, were clunky and left much to be desired. As EMS became more sophisticated, the demand for a better integrated solution increased. However, while the idea of creating an integrated best-of-breed solution is nice in theory, one cannot simply flip a switch and make it happen.
We wanted to integrate order management and trade execution in a truly synchronised manner to tackle the pain points associated with existing OEMS offerings. Clients require seamless interoperability, not “pretend” interoperability, and are cost-conscious in light of pressures on fees in the asset management industry. We realised that to accomplish our goals we would have to form a true alliance that was deeper than the “partnerships” many firms have with other vendors. We have worked closely together over the past five years to identify and address the issues that caused other solutions to fall short, and the enthusiastic response from clients is a testament to the success of these efforts.
Client-driven development roadmap
Client feedback drives the alliance’s development efforts. We’ve worked closely as partners, consulting our combined clients and prospects how their workflows can be optimised and how we maximise desktop real estate while minimising operational risk and multi platform dependencies.
Going forward, we will continue to focus on the needs of our clients. The enhancements we are working on tend to involve data and enhanced workflow solutions, with the goal of delivering functionality that really matters to clients. For example, we know that for traders in risk-averse long-only asset management firms, the primary objective is to get trades done without mistakes and to minimize slippage. Hedge fund traders, who live and die by alpha, want an EMS system that can handle any algorithm, automate trades and do it quickly, and that offer the ability to customise their own algo wheel. We are constantly looking for better ways to make all of this happen – quickly, seamlessly and intuitively.
Our guiding principle is to provide the most efficient centralised, cross-asset class view for multi-asset investors so that portfolio managers can confidently communicate orders to traders, and just as important, the feedback loop between the trader and the PM becomes tighter as both parties increase their use of data. This is possible today, since information now flows seamlessly between the TS Imagine and SimCorp platforms.
The TS Imagine IUCM team:
This case study presents just one example of how a collaborative effort between MTS Markets International, Inc. (MTS), a data/liquidity provider, and TS Imagine (TSI), an EMS provider, helped a mutual client – Agilon Capital – optimise its corporate bond trading operation.
Fixed Income markets are based on an underlying assumption that has prevented the development of a market structure that enables liquidity, transparency, and higher volumes.
A start-up hedge fund in Hong Kong with a highly respected management team and extensive trading experience gains real-time portfolio and risk capabilities, wide coverage, and simplified client reporting with the TS Imagine platform.