Modernisation of ECM workflow

Plato Partnership’s Buy-Side and Sell-Side members have defined and agreed upon an ECM model where Primary Portal provide an end-to-end electronic workflow by integrating with both buy-side E-OMS and sell-side bookbuilding platforms to enable an end-to-end electronic workflow while ensuring sell-side processes are not impacted. Primary Portal is currently working closely with the major global equity book-building platforms and buy-side EMS/OMS providers with a view to implementing this model next year.

Plato has also published a letter supporting the modernisation of ECM workflow through the implementation of an electronic model with industry providers. The letter was shared with sell-side ECM teams, buy-side market participants, and primary book-building platforms. It requested their support in Plato Partnership’s initiative to build an electronic model with industry providers that integrates buy-side E-OMS and bookbuilding platforms.

The defined model and letter are published below.

Equity Capital Markets Electronic Workflow Solution

  • Primary Portal to be the single-entry point for Buy-Side global ECM (and also eventually DCM) to enable an electronic workflow between Buy-Side and Sell-Side without impacting Sell-Side ECM workflow.

  • Primary Portal to integrate with Primary bookbuilding platforms (ION Dealogic, S&P Ipreo, Capital Markets Gateway, Sell-Side proprietary) to enable Regional Sell-Side ECM teams (and also eventually DCM teams) to continue to use their preferred bookbuilding platforms and follow existing workflow. Primary Portal would also integrate with other bookbuilding platforms if they were interested.

  • Buy-Side E-OMS integrate with Primary Portal (Via APIs) for an end-to-end electronic workflow that enables Buy-Side to place indications of interest with Sell-Side via their E-OMS, and receive resulting Sell-Side allocations back into their E-OMS for automated trade booking. If a Buy-Side firm’s E-OMS was not integrated, they could still use the Primary Portal application for an electronic workflow, however, trade booking of the allocation would be manual.

  • Primary Portal would charge party(s) a fee for the electronic workflow service e.g. Buy-Side.

  • Plato Partnership to facilitate bookbuilding platforms and Buy-Side E-OMS providers to integrate with Primary Portal.

The Letter: Plato calls for modernisation of ECM Workflow

Plato Partnership believes it is the right time to focus on improving the electronic workflow for entering orders and receiving allocations in the IPO and secondary issue equity markets. Despite increased electronification across equity markets, order entry and allocations for new issues and secondary trades has remained a largely manual process.

We recognise there are challenges in integrating the diverse range of electronic solutions offered by various providers. However, the benefits of streamlining this workflow are clear. An electronic equity capital markets workflow process can improve governance, enhance efficiency, and reduce administrative errors for buy-side and sell-side.

Asset managers have sometimes been cited as resistant to change in this area. This letter aims to signal buy-side support for electronifying the equity capital markets workflow. While implementation costs are a valid concern, the long-term savings from reduced errors and improved workflows outweigh these upfront costs.

In fact, the Investment Association has recently published a position paper calling for collaboration between buy-side and sell-side firms to automate IPO processes. They are mobilising industry participants through a working group to drive progress in this area.

Plato Partnership is aligned with this vision and welcomes any initiatives that advance the electronification of workflows in the equity capital markets. We believe these improvements will benefit the broader financial ecosystem.

Our model has been defined and agreed upon by Plato Partnership’s buy-side and sell-side members and has Primary Portal providing an end-to-end electronic workflow by integrating with both buy-side E-OMS and sell-side bookbuilding platforms to enable an end-to-end electronic workflow while ensuring sell-side processes are not impacted. Primary Portal is currently working closely with the major global equity book-building platforms and buy-side EMS/OMS providers with a view to implementing this model next year.

Please consider this letter as an expression of our support for modernising these important post-trade processes. Plato Partnership also requests the support of the banks, buy-side, and book-building platforms in supporting this initiative and its implementation.

Yours faithfully,

Plato Partnership

Published 04/12/2024