FIX Protocol Limited (FPL), the non-profit industry association that owns, develops and promotes the FIX Protocol, welcomes the decision by a consortium of 12 leading investment banks to jointly engage with existing and emerging fixed-income market venues and ISVs to promote increased use of the FIX Protocol and other open standards such as FpML, across the trading life cycle of all fixed-income products.
The FIX Protocol is the language used by firms across the world to facilitate electronic trading. It has achieved mass adoption for front-office equities trading, and its use is steadily expanding across the foreign exchange, derivatives and fixed-income markets. This expansion is consistent with the recommendations set forth in the 2010 released Investment Roadmap, which FPL produced in collaboration with other leading standard bodies to provide the industry with clear direction as to which standards should be used to support business processes throughout the trade life cycle.
Adoption of the FIX Protocol by exchanges and ECNs has risen significantly over recent years, and many of the new trading venues that emerged following the implementation of MiFID in Europe chose to offer FIX connectivity. FIX offers market participants significant cost savings and efficiency gains by connecting firms to trading partners in a standardised and cost‐effective manner, minimising the financial implications of market entry and significantly reducing switching costs.
As Dodd–Frank reforms seek to achieve greater market transparency by requiring most types of OTC derivatives to be cleared through clearing houses and traded on swaps execution facilities (SEFs), a surge in new market venues is expected within the US. Similar reforms are also expected to emerge from the upcoming MiFID II regulations in Europe. Encouraging adoption of FIX by new and existing venues will significantly increase efficiencies and cost savings for all participants within the fixed-income markets.
FPL will work closely with the consortium to identify any additional functionality needed and ensure FIX effectively meets the evolving business needs of the fixed-income markets. The parties will also collaborate to produce best-practice guidelines that encourage FIX use in a standardised manner and achieve maximum industry-wide benefit.
Commenting on this initiative, Ric Elvir, Co-Chair of the FPL Global Fixed Income Committee, UBS stated, “FPL is supported by leading financial services companies from the buy- and sell-side, as well as the exchange, ECN and vendor communities. By engaging FPL, the consortium will benefit from the expertise, knowledge and extensive experience of the organisation’s industry-wide membership.”