On the other hand, there remains a relatively high proportion of futures and options instruments that are fairly illiquid and synthetic combinations that are difficult to execute and require a more high-touch approach. Architecture that is optimized for low- latency workflow and low-touch trading, also has to provide services to those clients who want managed care orders as well as DMA, algos (benchmark or execution) and auto-spreading functionality. The systems have to cater to firms that simply want a screen or those that want to send FIX message flow as well as buy-sides that want their broker to manage their considerable flow on a 24-hour basis.

The difficult choice facing the larger firms is either to build their own systems in-house or to cobble together a solution from multiple third-party vendors. Both tend to be very expensive, inflexible and sub-optimal. Working with disparate EMS, OMS, risk management and mid-office systems presents serious integration risks and hinders the ability to create a fully functioning, stable, centrally controlled global order book.

However, there is now a third alternative, which is to leverage the experience and technology gained through the automation of the global equities market and apply it to the creation of a single trading platform for futures and options. In effect this means deploying sophisticated global order management systems with seamless throughput from FIX allocations to mid-office functions on the futures and options desk.

Centralizing activity through a single platform creates a very powerful tool. It allows traders to share visibility and management across the regions and it facilitates the centralization of key functions such as global risk, compliance, mid-office tasks and allocations for greater effectiveness.

There is an interesting comparison to be drawn with order management systems in global equities trading. Dealing with complex synthetic strategies and the dizzying array of instruments that typify the futures and options space is more complex than managing simple equity (or equity-like) assets – but the workflow is typically much more straightforward in futures and options because in almost all cases – besides U.S. equity options – there is a unique and mostly liquid place to trade each product.

For equities it is the complexity around fragmented markets that has elevated the sophistication of order management systems. But for listed futures and options it is the global scale of the markets and the fact that the contracts are part of a largely global marketplace that demands effective order management behind the basic market gateways.

In many respects the equities markets have led the way in the evolution of systems whether that be through the early widespread adoption of FIX, full automation of the middle office, the advancement of algorithmic, basket and SOR trading or the pressing latency demands in the HFT space. All these challenges have been overcome and the technology is now becoming available to the futures and options markets.

The landscape of futures and options is changing. The impact of Dodd-Frank on this space is yet unclear but readiness for a complex and fragmented OTC market and the inevitable collision course with the listed space will be interesting to track. 

How ready is your system for the changes ahead?