Why Order Management Systems (OMS) and Operating Models Will Need to Continue to Evolve – What’s Next for the Australian Superannuation Market?

Australia’s superannuation system has evolved to become one of the most complex institutional investment environments globally. This is driven by multi-option product structures across various lifecycle cohorts, a hybrid approach of internally & externally managed funds, daily pricing and liquidity requirements, operational time zone challenges with US markets, as well as regulatory APRA/Your Future Your Super (YFYS) reporting demands.

This complexity means many of the Order Management Systems (OMS), which were built initially for asset managers, leave operating model decisions for asset owners in the Australian superannuation market. Our experience shows that Super Funds are increasingly turning to specialist asset-allocation platforms at home and abroad, or building their own tools to close the gap between risk analytics and being able to make seamless implementable investment decisions across multiple member investment options.

This thought leadership piece aims to explore this unique industry challenge in Australia and open a discussion regarding the implications for Super Funds, technology vendors and custodian service providers.

Australian Super Funds often manage dozens of investment options, each with its own Strategic Asset Allocation (SAA), rebalancing rules, liquidity constraints, fee structure and APRA classification requirements. Global OMS platforms evolved meeting the needs of traditional asset managers as well as single-portfolio pension and insurance plans versus the unique challenges present in Superannuation fund operating models with differing portfolio structures and the way the funds operate against its objectives and evolving trends within the industry. These complexities and challenges include:

• Multi-layer, multi-option portfolio structures with daily pricing and complex allocations of cash throughout the structure
• Lifecycle cohorts of member investment options with glidepaths to lower risk options closer to retirement
• A hybrid of internal and external managed assets across both public and private assets
• and benchmarking
• Overlay and hedging programs within increased sophistication of derivative instruments requiring enterprise-wide coordination
• Having a clear up-to-date view of current and upcoming investable cash at various levels across the fund structure including member flows, private asset commitments and derivatives funding requirements
• Time zone challenges, where Australia’s Start-of-Day clashes with global markets End-of-Day
• Post-Merger activities that create disparate data and product sets

These complexities often surpass strain the native functionality of traditional OMS platforms, leaving Super Funds to face a decision to build, buy or partner with a different vendor to supplement the functional gaps. Some client example outcomes we’ve seen in the market are:

1. Deciding to build bespoke tools in-house integrated to their OMS to meet their SAA/DAA workflow requirements.
2. Using their OMS for internally managed assets only, and implementing a data management platform to aggregate the total portfolio view, manage Asset Allocation, cash allocations, as well as integrate downstream to specialist Risk tools.
3. Building spreadsheets systems to calculate cash allocations and feed their OMS to generate trading instructions.

In our experience, Super Funds are turning to specialist asset allocation platforms/vendors to work alongside OMS platforms because their SAA/DAA modelling, optimization, scenario analysis, decision governance and workflow requirements can’t sufficiently be met by their OMS alone. To be specific, OMS limitations often show up when solutions are required for rebalancing multi-option Super Funds, for example:

• Algorithm rules for cascading cashflow allocations across investment options and asset classes
• Netting logic, i.e., offsetting internal buys and sells
• Look-through exposures across multiple member investment options
• Automated order generation across fund-of-funds, derivative overlays and diversified cash portfolios

Without a “silver-bullet” enterprise solution available, Super Funds are facing into managing increased technology and integration complexity.

The requirements of today’s Australian Superannuation funds when compared to the current native functionality of OMS platforms leave a technology challenge to be addressed. As funds grow in scale and complexity, different pathways are emerging to close this gap. The following scenarios outline how the asset-allocation technology market may evolve -from the rise of specialist allocation engines, to OMS vendor expansion, to the possibility of a fully integrated Total Portfolio Approach solution. These scenarios are not mutually exclusive; each reflects the signals visible in the market based on our experience supporting clients implement solutions and enhancing their operating models.

What about AI? Our view is that the rapid acceleration of AI, citizen development and vibe coding is already by and large in the mainstream and likely to form a significant element of all 6 scenarios, hence is not listed as a scenario in itself.

• Scenario 1 – Specialist Asset Allocation Layer Becomes Standard: Specialised platforms become an essential middle layer sitting between analytics and OMS systems. The maturity of these operating models will encourage further native integration capabilities between vendor platforms, likely benefiting from MCP and enhanced API automation.
• Scenario 2 – OMS Vendors enhancing Asset Allocation Capabilities to meet Australian market demands: OMS providers invest in SAA/DAA workflows, glidepaths, overlay management and multi-option auto-rebalancing capabilities to defend their market position in Australia. While incumbent OMS providers hold a strong position in the Australian market and have plans to expand their asset allocation capabilities, in our experience there is currently limited out-of-the-box native functionality developed specifically for the Australian Superannuation client. As mentioned, OMS platforms have traditionally been built for Asset Managers and trading workflows, which is remains attractive for Super Funds alongside a trend for increasing internally managed portfolios and direct trading. We expect Super Funds to continue putting pressure on OMS providers to develop platforms to better meet their evolving needs.
• Scenario 3 – Overseas Players Enter Australia: Attracted by large pools of AUM, European pension-tech companies will find the Australia market attractive and expand. Alpha is already seeing new entrants coming into the market with native asset allocation, currency hedging and rebalancing features that would suit many Super Fund operating models in Australia.
• Scenario 4 – Industry Consolidation & Integration: Under pressure to defend competitive moats, M&A activity leads to vendor consolidation (e.g., an OMS acquires a specialist Asset Allocation platform) and more unified / connected technology stacks which can meet Super Fund requirements end-to-end
• Scenario 5 – A Single Total Portfolio Approach (TPA) Platform Emerges: A vendor builds or acquires capabilities to deliver a whole-of-fund end-to-end TPA platform, integrating workflows across the value chain from . The foundational capabilities already exist across multiple vendors – but a one-stop-shop enterprise solution is still elusive.
• Scenario 6 – Internal Build by Mega-Funds: An Australian Mega-Funds ($100b+) decides to build proprietary Asset Allocation engines using their own data platforms, quant libraries and emerging AI tool set. The growing scale and operating leverage of some Mega-Funds makes this scenario plausible.

• It is generally accepted that no single vendor platform can natively meet all the requirements of a modern Australian Asset Owner,  e.g., multi-option, member lifecycle cohorts, regulatory requirements etc.
• Specialist Asset Allocation tooling is shifting from “nice to have” to core infrastructure.
• Data governance, IBOR accuracy, system integration and user friendliness of end-to-end workflows will determine which Asset Allocation + OMS solutions succeed.
• Super Funds must prepare for a world where Asset Allocation becomes a real-time, whole-of-fund discipline, not a periodic exercise.

• The “asset allocation middle layer” is now a strategic battleground.
• Opportunity for OMS vendors to extend or acquire Asset Allocation capabilities
• Specialist Asset Allocation vendors have a clear expansion opportunity in Australia’s $3.7T pension system.
• The vendor who integrates their data management, risk analytics, asset allocation, overlay hedging and governance processes into a seamless Total Portfolio Approach workflow can become the dominant investment technology provider in the region, across public and private assets.

Custodians continue to play a critical and enduring role in supporting Australian Superunds, particularly as the system of record for portfolio holdings across custody, unit pricing, investment accounting and middle-office functions. As Super Funds’ operating models become more complex, the importance of custodians as data stewards and integration partners is increasing rather than diminishing.

A key challenge facing Super Funds is the normalization and reconciliation of portfolio data across both public and private markets. This includes maintaining timely and accurate position data, consistent security master and referential data, and robust look-through transparency to support risk analytics, asset allocation decisions, and regulatory reporting.

This evolving landscape presents custodians with a clear opportunity to expand their value proposition beyond traditional safekeeping and accounting services. In particular, custodians are well positioned to provide outsourced data services and act as a central integration hub, offering native connectivity across multiple OMS platforms, asset allocation engines, risk systems, and downstream reporting solutions. By doing so, custodians can help reduce fragmentation in the data across the investment technology stack and improve the reliability of investment decision inputs.

Realising this opportunity will require deeper collaboration between custodians and superannuation clients to streamline data governance models across the full investment lifecycle. This includes clearer ownership of data definitions, controls, and timeliness standards across front, middle, and back-office workflows. Super Funds and custodians that successfully evolve these models will be better placed to support real-time asset allocation, Total Portfolio Approach frameworks, and increasingly stringent regulatory and member-outcome expectations.

Global OMS solutions are not “plug and play” in the Australian superannuation market due to operating model complexities, creating both opportunities and threats alike for specialist asset allocation platforms and OMS providers. We are already seeing asset allocation solutions being deployed as the critical layer enabling efficient, transparent, and scalable investment decision-making. As the industry consolidates and regulatory expectations tighten, the race is on for both established vendors and new entrants to deliver the next generation of end-to-end Total Portfolio Approach solutions.

Alpha has worked with 15 out of the Top 20 Australian Super Funds, as well as 3 out of 4 of the largest APAC sovereign funds. Alpha has a deep understanding of Asset Owners’ operating environment and key trends, including the shift to TPA.

For any enquiries, please contact us on: info@alphafmc.com