The traders, they are a-changin’ – and so must the OMS

When Bob Dylan sang ‘The Times They Are a-Changin’ on a single released 60 years ago this March, he put a message out that is, ironically, timeless. It is one that is also particularly pertinent in the ever-evolving world of trading, where it isn’t only the times that are shifting – the traders, they are a-changin', too.

The traders seen in 1980s films like Wall Street, sporting pinstriped suits in chaotic open-outcry pits, are relics of a time long since passed. They have been replaced by extremely tech-savvy, often quietly focused, professionals. And they are perched on highly sophisticated brokerage desks – not on their feet in a frenzied mass of chaos.

What is behind the change? Several powerful structural themes, most notably the rise of electronic trading and algorithmic dominance. But there are a few, somewhat overlooked, factors that dictate how modern traders must do their job. One of the most prominent in today’s market environment is the need for sophisticated, and customisable, order management systems (OMS).

Market traders use OMS to streamline their trading operations and improve efficiency. They are an essential tenet of a whole host of critical front-office tasks, from order execution to risk management, regulatory compliance and data analysis. They are also crucial in helping traders navigate volatile markets, when trading volumes are peaking, enabling them to manage large order flows, execute complex strategies and monitor risk exposures in real-time.

Indeed, they have become essential to trading success in the increasingly complex and unpredictable market environment in which modern-day traders now operate. The problem is many financial institutions remain encumbered by legacy OMS, most of which were implemented long before this new type of trader had even finished school.

It is hardly surprising, then, that a growing number of banks and brokers are re-evaluating their OMS – especially given trading volumes across many asset classes are surging to record highs. Take, for instance, listed derivatives. According to the Futures Industry Association (FIA), worldwide volume of exchange-traded derivatives reached 18.99 billion contracts in July 2024 – the highest level ever recorded at that time. But this lasted only a few months, with October setting a new record of 20.56 billion contracts traded, up a considerable 52.4% from the previous year.

What is surprising many banks and brokers, though, is the feedback they are receiving around traders’ OMS preferences. The top talent is no longer content with a one-size-fits-all OMS – these are simply too limiting. Modern traders are as proficient with technology as they are at making markets and trading their own book. As a result, modern traders typically prefer to script their own features within their OMS, implementing specific workflows with the use of coding languages like VBA and Python. Because of this, legacy systems don’t merely hamper staff productivity, they actually pose a major barrier to hiring and retaining the best talent.

While not every trading desk will require the degree of customisability demanded by the top traders, with many preferring to simply use an out-of-the-box system, it seems likely a growing number of market participants globally will be implementing more sophisticated, flexible systems over the coming months. Those that overlook this factor could find their front office revenues fall faster than a rolling stone.