Quants, Compliance and the Buy-Side OMS

OMS Challenges for the Buy-Side

As hedge funds turn to a more active, quant-style of trading, they often need to run pre-trade compliance checks on hundreds if not thousands of names within seconds.

But what happens if an OMS is not built to keep up with the rapid pace of executions and compliance checks?  There’s no doubt that the move toward quant trading has raised the stakes for buy-side OMSs that serve hedge fund clients executing baskets with thousands of names.

Some OMSs easily handle big blocks of 100 trades, but they may stumble over executing a large portfolio of names. For example, a quantitative hedge fund may be required to trade 1,000 names every five minutes. (While this is not in the category of high frequency trading, it does involve running compliance checks on many names concurrently.)

At the same time, hedge funds must comply with a myriad of pre-trade compliance rules, order marking, restrictions and short locates.