Focus on Order and Execution Management
With Alison Hollingshead, Chief of Staff, Trading Platform & Core Technology, Man Group, and Sam Ratcliff, Head of Execution Technology, Man Group
Briefly describe Man Group and the profile of its trading desk(s)?
SR: Man Group is a global, technology-empowered active investment management firm. Our investment engines invest across a diverse range of strategies and asset classes, with a mix of long only and alternative strategies run on a discretionary and quantitative basis, across liquid and private markets.
AH: Historically, Man Group has actively grown through the acquisition of our investment engines, Man AHL, Man Numeric and Man GLG. Over the past few years, we have gone through a transformation to achieve a single, multi-asset, globally distributed trading desk which acts as the single point of execution for all long only and alternative funds. Prior to this, each of Man AHL, Man GLG and Man Numeric retained independent desks and, as a result, diverse technical stacks. In this new structure, we have more than 50 people globally across trading, engineering and research dedicated to execution excellence for Man Group’s clients.
How do order and execution management work at Man Group? Are the O/EMS built internally or are they from external systems providers?
AH: Due to Man Group’s acquisitional growth, we had a set of existing and inherited, independent O/EMS toolkits. Having centralised execution, we continue the journey of simplifying and consolidating the functionality within these systems to provide a consistent, best-in-class order and execution management toolkit.
SR: Two of Man Group’s principles are excellence and differentiation, and they guide how we deliver technical solutions to the challenges we face across the firm, including our order and execution management systems. To deliver on our ambitions in the O/EMS space, we aim to provide the best set of tools available, made possible by internally developed platforms, that allow us to leverage our proprietary systems alongside products from our vendor partners. This allows us to focus our internal development resources on delivering differentiating value to our clients, rather than reimplementing commoditised functionality.
An example of the success of this approach is our ability to deliver bespoke solutions for specific problems, such as leveraging a vendor EMS designed expressly for the execution of FX volatility products.
There is an industry trend toward simplification of the technical stack. What is Man Group doing in this area to enhance execution management?
SR: At the end of March this year, we marked a major milestone in our drive towards a simpler execution toolkit – we had the first day where all equity and listed derivative order flow across Man AHL, Man GLG and Man Numeric was executed through a single EMS.
When the central trading desk was formed, there were more than five EMSs required to manage the same order flow. This consolidation down to one was made possible by the first half of our toolkit’s foundation, a platform responsible for the coordination between our internal and vendor provided systems that provides a consistent experience for the trader and on which we build our automation capabilities. The development of this platform also created common standards and patterns, which are used across our components for efficiency of development, except where the complexity of an alternative is outweighed by the value, our recent blog post on using Aeron specifically in our FX system is a good example.
The second half of our toolkit’s foundation is a new TCA platform, which in part is based on technology previously developed by our risk team and regulatory reporting data to present a normalised representation of our orders and easy to use analytical and aggregation logic to our researchers and traders.
Together, this is Man EMS. While we are early on the journey of building this system, the benefits of a simplified execution toolkit are already evident.
How is Man Group simplifying the technical stack to enhance order management?
AH: Towards the end of 2020, we embarked on an ambitious program to design and build a centralised suite of user interfaces, APIs, services, and data that will make up the core order management capabilities for all our investment engines. The key goal is to enable each business to retain control of proprietary alpha generating processes, while enjoying the efficiencies of centrally managed operational services. With our user base being both quant and discretionary, we have the interesting challenge of building an open toolkit that is agnostic to where the investment idea comes from.
Today, the current tooling is varied, with numerous performance and position management applications and four overlapping OMSs. We are targeting one portfolio management system to support the investment lifecycle from idea to trading desk. As with execution, the guiding principles are to ensure we have the best tools for the job, vendor or proprietary, and to simplify – with only one home for each activity.
Across the firm today, there is a varied level of standardisation. To deliver a simplified common OM platform, we first need to harmonise our historic operating models. We can leverage the best of each investment business, benefiting from many years of cumulative experience as we move towards a new level of maturity for the Man Group platform.
What is Man Group doing to expand automation on the trading desk, and how does this manifest itself in terms of more efficient trading?
SR: The drive towards expanding automation is an area that requires collaboration between and benefits from the integration of all three disciplines of the trading desk: trading, research and engineering. What is crucial is that we all agree that it is through automation and allowing our traders to concentrate on those more difficult orders that we can deliver the best post-execution alpha to our clients.
Automation is not new for us, even back in 2018 we used machine learning on orders representing more than 50% of our traded volume to automate execution, resulting in 85% of Futures and FX orders being executed via our own proprietary algorithms. Since then we have continued to focus on increasing these numbers and identifying further automation opportunities within our existing workflow through internal development and working with our vendor partners. For us the exciting opportunities for automation reside in the traditionally manual markets such as credit. In recent years we have seen several structural changes with increased electronification and improved functionality of platforms that make automation possible where it wasn’t even a few years ago.
How is Man Group integrating and enhancing data access and utilisation in execution and order management?
AH: Man Group is also on a journey in our approach to data. Our back and middle office has long been built upon a single central data model, which enables the breadth of our business. In 2017, we extended that model to the trading world to meet MiFID II regulatory needs. We now have all executions across the firm in one place, flowing into the TCA platform and accessible for analysis by investment management and research.
The order management initiative targets the remaining complexity, where we still have four OMSs feeding into the central platform. The team has recently delivered the first slice of the new system, providing a scalable and flexible foundation integrated with the existing Man Group data model to provide an augmented dynamic data reporting tool. This allows us to quickly and easily present different data sets at the point of order entry to better inform investment decision making, for example ESG data and SFDR impact ratings.
For vendor sourced data, we have also invested in a data onboarding team, allowing for huge numbers of data sets to be made accessible, navigable, and discoverable across the whole of front office.
This standardisation of data and data models is a big focus for us, allowing for superior interoperability and improved understanding and analysis; for example, the normalisation of execution instructions to allow for better segmentation and post trade analysis.
Is there such a thing as a best-in class OEMS, or does a trading desk still need best-in-class OMS and EMS separately, and then integrate?
AH: A best-in-class OEMS feels like a limited ambition to us. We are thinking in terms of a best-in-class operating model and platform, which includes order and execution management.
Man Group is complex and we require flexibility, responsiveness and speed, and we achieve this through a combination of both proprietary and vendor tooling.
What is the future of order and execution management on the buy-side trading desk?
SR: We envisage a world of investment professionals and traders who are empowered by technology. Within the last year we have started an internal programme called <develop> to deliver practical Python and data science education, which is available to anyone in Man Group. Users will be upskilled on how they can leverage technology in their role including richer access and manipulation of data while technologists will work closely with them to provide the most enabling toolkit.