The Canadian investment management industry has increased its use of OMSs and electronic trading as it responds to mounting regulatory and investor pressures for best execution and cost reduction.
According to Jackie Chung, author of the Buy-side Electronic Trading and Best Execution in Canada report, three primary drivers of buy side electronic uptake in Canada are greater trading efficiency, maintaining anonymity in a market comparatively more transparent than the US and UK, and the lowering of trading commissions.
"Unlike the US or the UK buy-side firms, which are more sizeable with much bigger teams of in-house equity traders, firms in Canada are characterised by small equity trading desks," Chung explains. "Few Canadian firms would have more than five or so traders. With such numbers, and managing so many different broker relationships, manual processes won’t work."
Chung adds that a key facilitator of wider use of electronic trading in Canada has been widespread adoption of OMSs; 60% of Canadian managers now use at least one OMS, she says.
"Ideally, e-trading would involve importing orders directly from your OMS," Chung says.
A significant number of Canadian managers rely on proprietary desktops from their electronic trading providers while they get their OMSs up and running, she adds.
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