Man Group is now live on an internally developed order and execution management system (OEMS), to trade across asset classes, currently covering corporate credit, sovereign debt and equities.
Developed by a team including Sam Ratcliff, head of order management and analytics and Oskar Wantola, head of execution technology at Man Group, the system replaces a number of third party tools previously in place.
Paul Kamenski, co-head of credit at Man Numeric announced the launch on 5 December at the firm’s ‘2025 Credit Outlook’ event.
“The OMS determines how you get orders from different portfolio managers to a central trading desk, and the EMS is how you get those orders out to the market,” he said. “We’ve been able, over a multi-year project, to build that in-house, with the goal to be really nimble.”
Electronic execution has been transformed through the capacity to trade with different counterparties and using different protocols.
“For us, 2021 was the year of portfolio trading,” he said. “This is where we saw not only top tier dealers, but even second, third-tier dealers start to price aggressively, with tremendous competition for market share.”
He added that by the end of 2021 Man Group was trading close to 70-80% of its credit volume by portfolio trades.
“To put that in comparison not that long ago, the market broadly hit over 10% of portfolio trading in April of this year,” he said. “Then everything hit the fan in the first half of 2022. Rates volatility shoots up. There were a lot of changes in the corporate credit market in terms of the ETF create-redeem process, which meant they couldn’t be as customized in terms of which baskets that they would be able to pull together. When you have that lack of ability for risk transfer for portfolio trading desks, and rates volatility picks up, dealers start to back off. Trading got very expensive. The traditional mode of execution got very expensive and very difficult. By the end of 2022 we were more than 90% trading single name, electronic, and we’re close to 98% now. So this has been a tremendous transformation.”
Speaking with the DESK, he said, “The Man OMS and EMS (MOMS/MEMS) is designed to be multi-asset class, but we are not fully cutting out all other third party platforms. We’re still leveraging other solutions, but it is replacing a lot of the core infrastructure that we have across our OMS and EMS estate.”
He also explained that it is expected to soon have the capability to trade listed derivatives. He declined to note which systems had been sidelined, but was clear that internal development was key to the firm going forward.
“It is worth saying, even the other systems that we’re using are actually a combination of internal, proprietary systems and external. Man Group has a history of acquisitions. One of the big selling points of Man Group is providing a platform, and this has been the biggest push ever in terms of a consolidated execution platform.”
In terms of its connectivity with trading venues and direct connectivity with banks, he said it is connected to “Everything.”
“[Given] how fragmented liquidity is within corporate credit you can lose out materially if you’re not connected to everything,” he continued. “This is the reason it’s taken years and not quarters. [Developing] an OMS and an EMS is a big effort, no matter how you slice or dice it. But to have the connectivity in place to all the different platforms is critical.”
The challenges around execution quality were brought into focus during the event, when Mike Scott, head of global high yield & credit opportunities, discretionary at Man Group, noted the manual approach to trading often needed for discretionary funds.
“Ultimately we’re quite high touch in the way that we face the market,” Scott said. “Essentially, we need to be very quiet in how we monetise, and get into and exit positions. We’re still very much voice [trading], There’s an art in the way that we face the market. For investment grade and crossover liquid high yield, then there’s a real price for it. Barclays told us today that the systematic guys have really come up in terms of their trading volumes relative to where buy-side trading was even three years ago. But for us, it’s still a very people-focused approach.”
Kamenski noted that increasing the use of systematic trading materially assisted in trading larger positions by taking a more nuanced approach to the sizing and timing of individual trades, which can overcome certain market structural issues.
“A couple things are happening,” he explained. “The activity and size that banks are willing to take down by a voice is becoming smaller, and more difficult. There’s more risk management on their side. More concern of cost of capital and principal balance sheet usage. If you blast the market saying you want to buy US$20 million, that can start to move pricing.”
The solution has been to engage more frequently and with trades that are built using a detailed picture of that bond’s activity.
“We found shifting the process from weekly rebalances to daily rebalances is incredibly helpful,” he said. “We found shifting away from non-generic trade sizing, and towards trade sizing by ISIN, so the trade fits well within the market [is helpful]. But it takes quite a bit of data to do that. You can’t just look at runs, you can’t just look at TRACE, you can’t only look at TraX or Euroclear. You need inventory data, request for quote (RFQ) information from multiple platforms. You need retail screens and direct connectivity. This is where having the capacity and the bandwidth from a data point of view, from an architectural point of view, and now from a platform point of view, with MEMS and MOMS, puts us in a position where we can be really nimble.”
