The Growing Market for Crypto Order Management Systems

EXECUTIVE SUMMARY

The order management system (OMS) plays a central role in the day-to-day activity of buy-side and sell-side firms. Participants entering the cryptocurrency market need a solution that can be used to properly route orders, be it a multi-class OMS that includes cryptocurrency trading, or a standalone OMS that supports solely digital assets.

While conventional and crypto OMSs do not diverge considerably, there are some key differences. For example, crypto OMSs normally incorporate REST APIs or WebSockets for connectivity, as many crypto exchanges do not support FIX messages, or did not do so originally.

In looking at the landscape of providers, vendors can be grouped into two main categories: incumbent OMS vendors and pureplay crypto OMS vendors. Incumbent OMS vendors are those who began by offering a solution for trading traditional asset classes and have added support for cryptocurrencies recently, such as Broadway Technology, Deltix, Gold-i and HedgeGuard. Pureplay crypto OMS vendors are those who cover solely digital assets, with examples being CoinRoutes and Talos. Crypto OMS vendors differentiate themselves in their source of market data feeds, partnerships with custodians, the types of messaging they support, the number of liquidity venues they are connected to, and the pricing model they follow.

The market for crypto OMSs, though still rather nascent, is evolving. While early participants tended to be technologically savvy, building their systems in-house, newer entrants are more likely to depend on a third-party offering. Opimas estimates that total spending on crypto OMS technology reached just over US$180 million at year-end 2020, with three-quarters of market participants building their own systems in-house. However, the market for external vendors is growing fast, at 28% annually, while spending on in-house builds is decreasing at -2% per year.

Given the novelty of the space, Opimas expects considerable developments in the long term, including the commoditization of offerings and a consolidation of the market which may involve incumbent players.

SPENDING ON CRYPTO OMS TECHNOLOGY – IN-HOUSE VS. EXTERNAL

 

 

 

 

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