An OMS for Retail: Why Speed, Compliance and Technology Are Key Success Factors

Order management system (OMS) – it’s a term that’s rapidly losing its meaning. These systems are still the operational backbone of the trade lifecycle, with broker-dealers around the world relying on them to efficiently track and process millions of orders each day. But amid growing diversity in terms of their business models and target audiences, the precise nature of that tracking and processing can vary widely.

Thanks to a confluence of factors – the race to zero commissions, the availability of technology, the rise of social media and, perhaps most notably, the COVID-19 pandemic – trading activity among individual investors has surged in recent years. Retail brokers have scaled and proliferated accordingly, which means their need for efficient execution and operational processing is greater than ever. This is where the right OMS can provide major benefits, but too often, the established names that have historically served institutional brokers are ill-equipped to support the unique requirements of the ever-expanding retail trading community.

One key difference is that while an institutional OMS prioritizes optimization, a retail OMS is all about speed. Institutional traders want the lowest fill prices they can get while keeping market impact to a minimum, which creates a complex web of decisions for their brokers – how to break up the order, when to send it and other considerations. Retail traders, on the other hand, aren’t overly concerned with squeezing every last drop of revenue out of each order. They simply want to see how much money they have, whether trades have been executed and how much profit they made – and they want this information right away.

There’s also the fact that a retail OMS must include a broader range of functionality than its institutional counterpart. For many operational processes – cash balance management, pre-trade compliance checks, post-trade reporting and the like – it is easier to manage a relatively small number of established institutional clients than a massive roster of individuals. To perform them quickly and at scale, retail brokers need specialized technology.

Retail Brokers’ Key to Success: Operational Efficiencies Across the Trade Lifecycle

The success of any retail OMS is defined by its ability to ease the operational burdens that brokers face. With enhanced visibility and automated processes in place, technology staff can focus more on areas that add value, such as the front end and client experience.

While speed is a crucial success factor, it’s not enough to simply be fast. The OMS must support rapid execution in any environment – across asset classes, throughout the world and with a wide range of execution venues, as well as with single- or multi-custodial setups. The retail trading community has become not just more active, but more diverse in terms of what and where they want to trade. Brokers need to have the ability to support as many of their trading goals as possible.

Transparency and flexibility provide further operational benefits. A retail OMS should provide everything needed to monitor and control users, accounts, orders and positions, as well as buying power, bank linking, money movement, corporate actions, market data subscriptions and more. There are many roads to providing a great retail investing experience, so brokers should ensure their ability to influence as many parts of that equation as they can.

Finally, a comprehensive array of risk and compliance tools can serve as a powerful defense against operational complexity. These include pre-trade account/jurisdiction checks to ensure every order is compliant before it goes out. They also include reporting to regulators, from FINRA (CAT, TRACE) to the SEC (Rule 15c3-5, Rule 606). Trade surveillance tools are yet another piece of the puzzle. For a retail OMS to truly accelerate and support broker operations, all of these capabilities must be in place.

The Technology Challenge – and the ViewTrade Solution

Supporting these high-performance and wide-ranging functionalities poses a significant technology challenge. Building a proprietary OMS is a nonstarter for most retail brokers – they are expensive and require a huge amount of expert development resources to build and maintain. And while it’s possible to stitch together a system from multiple vendors, this adds friction – if the integration isn’t 100% seamless, the risk of errors can be significant. In an environment where speed is paramount and retail traders have endless choices, brokers should think twice before taking a patchwork approach.

It all adds up to a compelling case for a comprehensive solution – and that’s where we come in. At ViewTrade, our Watchmen OMS has been purpose-built for the unique needs of retail brokers. With a suite of plug-and-play services that support the full investment lifecycle in real time, our clients gain everything they need for efficient business operations, real-time control and superior client service. Retail brokers that make full use of Watchmen can reallocate their development resources to more profitable areas of the business – a compelling value proposition for teams that are stretched thinner than ever.

Many other OMS providers are just glorified messaging systems – they don’t have essential risk capabilities built in. And while other systems support only fixed rulesets for their own brokerage arms, effectively locking their clients into a strict set of parameters, Watchmen is built to support our clients’ systems as they want to build them. Our retail OMS operates independently of orders’ ultimate destination, giving brokers full flexibility no matter where they are or what they’re trading.

The fact that Watchmen is part of our larger Control Suite makes it even more transformative. In addition to the powerful middle-office tools provided by the OMS, the Control Suite enables retail brokers to serve their clients with rapid onboarding, intuitive user journeys, streamlined back-office capabilities and more. The result: an incredibly well-defined roadmap to providing great retail investing experiences.

In this rapidly shifting market landscape, it’s natural that retail brokers are feeling the pressure – but the right technology can help them move faster and support their clients efficiently, compliantly and at scale. Our retail OMS is the answer.

Interested in learning more about Watchmen? Download the product sheet, schedule a demo or get in touch directly – we’d love to talk to you.