Royalblue’s decision to splash up to £63 million on buy-side OMS vendor LatentZero has been given a firm thumbs down by industry analyst
Gartner.
Unveiling the deal earlier this week, the London-based vendor played up the strategic benefit to the two companies and their respective customers "by providing, for the first time, the potential for true integration of multi-asset buy-side and sell-side
trading flows".
Gartner pooh-poohs the idea, pointing to similar claims made by ITG when it acquired Macgregor in 2005. “To date…we have not seen such synergy materialise,” says analyst David Schehr, in an uncomprimising research note. “We find no significant reason for buy-side
firms to look favourably at a sell-side organisation gaining control over their OMS vendor because any synergies would likely benefit the provider more than clients.”
For good measure, Schehr recommends that LatenZero customers “look skeptically at any upgrades or pushes for expanded use of non-OMS royalblue services to ensure that any added features benefit you, and not just royalblue”.
Customers considering an OMS replacement, meanwhile, are urged to await evidence of the claimed product synergy between the two companies' offerings. “Should such synergy not occur within 9 months to 12 months, look first to other vendors,” says Schehr.
For my money, Schehr's being a bit hard-line. Chris Aspinwall and his team at royalblue have done a fine job in repositioning and growing the core Fidessa business since the low-point of the dotcom tech stock plunge. Now the vendor has set its sights on
the cross-asset trading space. Plug and play integration between the OMS and EMS is the name of the game here. As a broker-neutral vendor plying its trade in a market increasingly dominated by bulge-bracket buy side operators, royalblue should be applauded
for its ambition, rather than chided for the perceived failings of others.