The Institutional Meeting Place: A Closer Look At FIX Trading Community

Subsequent to the Forex Magnates report earlier this month on FIX Protocol's rebranding, we take an in depth look at

Earlier this month, Forex Magnates reported on the rebranding exercise which bilateral communications network FIX Protocol has completed, adopting its new designation FIX Trading Community.

The rebranding came about as a result of the organization’s need to diversify and expand into different areas of issuing standards for messaging and the organization’s involvement in post-trade messaging guidelines and presence on Senate advisory panels in relation to the Dodd-Frank Act.

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Trading Venue Community

In order to investigate further as to the role FIX Trading Community intends to play subsequent to its metamorphosis into a community, Forex Magnates spoke to Daniella Huggins, Global Marketing and Communications Manager at FIX Trading Community.

Daniella
Daniella Huggins, Global Marketing and Communications Manager, FIX Trading Community

FIX Protocol had been in existence for 20 years, and concentrated on pre trade messaging protocols.

The last 8 months have seen a large number of changes, including the aforementioned set of post-trade guidelines and now the rebranding to a community. In outlining the driving factors of this, Ms. Huggins explained that “The FIX messaging language was originally developed over 20 years ago and the organisation responsible for developing and encouraging its adoption (previously known as FIX Protocol Ltd or simply FPL) has been active for more than 15 years”

Ms. Huggins continued that “FIX was originally developed to support equities trading, however, as market needs have changed, use of the standard has significantly expanded. FIX now supports equities, fixed income, listed derivatives and the foreign exchange markets throughout the trade lifecycle from pre-trade through to post-trade, pre-settlement.”

It is important to establish whether the Dodd-Frank Act implementation had a bearing on this, and whether its strict post-trade reporting requirements and trade repository rulings had been a factor in this evolution. “FIX Trading Community is an industry-led organisation, working to address the emerging business and regulatory challenges impacting its members and the wider trading community through the use of standards” stated Ms. Huggins.

“It is the needs of this sector that drive the organisation’s direction. As an example, with regards to Dodd-Frank, there is a push 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) which will result in a surge in new market venues within the US.

“The adoption of standards, such as FIX, by existing and emerging venues, would significantly increase efficiencies and cost savings for all participants within the fixed income markets. Keen to support this effort, FIX Trading Community brought together the trading venues, the broker-dealers that wished to connect to them and the buy-side community to help address this challenge.”

“Through this group, recommended best practices for the trading of CDS and IRS products using FIX have been developed, and are now actively being adopted by a number of the SEFs planning to launch later this year.

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“The organisation’s response to Dodd- Frank is one of many reasons as to why the decision to rebrand was taken. In recent years, evolving market needs like this have led the organisation to expand its focus looking at both FIX and beyond for ways in which standardarised practices could effectively address emerging challenges impacting global trading. The name FIX Protocol Ltd was selected at a time when the organisation was only looking at FIX the protocol, however, as the scope of work conducted by the organisation and the many opportunities presented for involvement have changed, it was decided that it was time for FPL to rebrand with a name that more accurately reflected the organisation today” she confirmed.

Senior US Government Official Advisory Panels

With regard to FIX Trading Community’s responsibility to the Senate panels and its position in steering and consulting on Dodd-Frank matters, Forex Magnates sought to establish the organization’s responsibilities: “As an independent and neutral industry organization, FIX Trading Community is focused on ensuring that the business issues raised by emerging regulation can be effectively addressed by the trading community” explained Ms. Huggins.

“To achieve this goal, the organization works with regulators globally to provide them with an increased understanding of the impact of certain rules and regulatory guidance on electronic trading infrastructure, and to offer the FIX Trading Community as an industry resource to support on-going regulatory efforts. For example, representatives from the FIX Trading Community have participated on the CFTC’s Technology Advisory Committee, which has tackled some issues related to Dodd-Frank.”

When asked whether this level of consultancy would require further leaders to participate and provide their services on behalf of FIX Trading Community, Ms. Huggins advised that the organization will continue without increasing the number of leaders present on all sides of the industry.

FIX will continue to be owned, maintained and developed through the collaborative efforts of FIX Trading Community member firms, which include many of the world’s leading financial institutions.

Ms. Huggins further detailed the operational methodology that “Through FIX Trading Community these firms work together to address the real business and regulatory issues impacting multi-asset trading in global markets through the use of non-proprietary, free and open standards, such as FIX. The organization aims to increase the adoption of standards to meet these goals so market participants can benefit from greater operational efficiencies, increased transparency and reduced costs and risks.”

Buy-Side Becoming Prominent

FIX Trading Community offers buy-side working groups, which bring together representatives from across the sector, creating a forum where the real issues impacting the industry can be openly discussed and addressed. A recent achievement from the organization’s buy-side groups was the release of recommended best practices for execution venue reporting, which provide buy-side clients with greater clarity and consistency regarding how, when and where a trade was executed. These best practices are now actively being adopted by the broker dealer community.

Ms. Huggins concluded by explaining the organization’s intention to create a cohesive group of ‘community members’ worldwide, in order that important matters can be raised. “The organization brings together member firms to work on initiatives with participants based across many different regions and in addition to the recent name change, we have also launched a new website that provides a dedicated on-line meeting place for the global FIX community, facilitating even greater collaboration and interaction between our 275 member firms.”

Overall, the general synopsis is that the new site intends to encourage debate and collaboration amongst members enabling representatives to share their knowledge and insight by contributing white papers, blogs and featuring discussion posts.

In congruence with the current trend for social interaction across networks in a professional environment, members can also connect with other participants within the FIX community, bookmark interesting content and provide links to articles they feel may be of interest to others, plus much more. Overall, this creates an environment where the FIX community can meet and discuss the issues that matter most to them.

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