When most people think about FIX API, probably the first thing that comes into their head is using the financial data messaging protocol for connecting traders with exchanges, market data, and liquidity providers. Basically, all the front office trading and execution stuff. But, increasingly, FIX API is becoming an essential conduit for the post-trade workflow.
FIX API is becoming an essential conduit for the post-trade workflow
In a survey conducted by the FIX Trading Community, a non-profit financial industry-backed initiative that helps create and promotes messaging protocol standards, they wanted to know just how far along the capabilities of FIX API are for handling the post-trade work flow of execution confirmations and affirmations.
Speaking to Tim Healy, Global Marketing and Communications Manager for FIX Trading Community, he explained to Finance Magnates that the buy-side has been a driver of embracing the use of FIX for handling post-trade workflow. According to Healy, this is due in part to a reduction in confirmation errors, cost benefits, and greater efficiency buy-side firms gain from the digitalization of the post-trade workflow.
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As a result, with the buy-side, including major fund managers like American Century backing the use of FIX API in the back office, the FIX Trading Community surveyed sell-side brokers and dealers to better understand what their capabilities are and opinions of the electronic messaging protocol.
For the survey, FIX Trading Community focused on post-trade workflow of equities. Among the main results were:
• 75% of respondents use FIX for their post-trade confirmation/affirmation workflow
• 95% of respondents believe FIX has the potential to have the same impact in post-trade as it has in the front office
• 70% of respondents see client satisfaction as an immediate benefit with a majority also confirming cost savings as a tangible advantage
Healy explained that within the FIX Trading Community, they already had a good idea that FIX was viewed positively among the sell-side. But, he added that the 95% figure of respondents who believe FIX has the potential to have the same impact to post-trade like it has for the front office was “very encouraging” to members of FIX Trading Community.
In terms of the future, Healy explained that the results revealed that FIX is impacting the equity world, but “more work needs to be done for non-equity asset classes.” This includes creating standards to allow for FIX to be used to streamline the post-trade process that the buy-side and sell-side communicates with each other for confirming and settling of non-equity orders.
Healy explained that in many cases, the buy-side and sell-side already have a communication process in place. This could be via emails and faxes, or other means of electronic confirmations of trades. Therefore, using FIX for post-trade workflow, the goal is how the protocol can be deployed to allow for the existing communication methods that are in place to become even more efficient.