Order-Channel Management - Controlling Transaction Costs in the Securities Trading Industry

[Bartholomäus Ende, E-Finance Lab]

Increasing demands on promptness and cost efficiency along with technological advances lead to a dramatic revolution in the way trading is conducted on international securities markets. New technology-driven execution opportunities enable buy-side companies to perform self-directed trading in order to allocate orders more efficiently. In parallel, the multitude of parameters and interdependencies to be considered leads to high complexity within Order-Channel Management (OCM) decisions.
After introducing the concept of Order-Channel Management (OCM) this presentation is supposed to outline means for analyzing the drivers for self-directed trading and tries to find out how a successful OCM can be established.
Concerning the identification of drivers, the theoretical basis of an ongoing survey on the buy-side’s decision for technology-driven execution opportunities will be presented. For an operational level of OCM, results of an investigation concerning potentials for arbitrage among European markets will be outlined.