10.23.2012

The Fix Is In

10.23.2012
Terry Flanagan

As Fix has evolved from a trade execution messaging protocol to become the de-facto messaging standard for pre-trade and trade communication globally within the equity markets, and is now experiencing rapid expansion into the post-trade space, the need has developed for non-technical users to be able to use it.

“Fix is a technology-driven protocol,” said Jim Timmins, co-head of enterprise software at NYSE Technologies, the technology arm of NYSE Euronext. “Over the last five years, this technology has grown to be embraced by business users, such as traders and analysts. Whereas in the past, our Fix products were being sold directly to the chief technology officer, now they’re also sold directly to end users.”

End users need to be able to use Fix to make decisions, such as where to route order flow. This used to be a coding effort.

“As Fix has moved from technology departments to the front lines, we developed powerful tools that allow business users to configure their Fix infrastructure and apply new rules without coding,” said Timmins.

NYSE Technologies’ newly-launched Appia Business Centre is a web-based interface that enables firms to configure and manage their Fix infrastructure, transform and route messages, establish pre-trade risk checks and expedite connectivity.

The new Appia Business Centre enables business users “to apply business intelligence rules to workflow”, said Timmins.

A “routing strategy engine” enables users to develop custom routing strategies to Fix messages for deterministic electronic routing to the final destination.

“Making decisions based on Fix tags or other conditions, buy side participants can easily route orders to the global brokers of their choice and sell side participants can route orders for execution on their preferred trading venues,” Timmins said

Fix, a financial messaging standard that is managed by Fix Protocol (FPL), is used to communicate trades and associated information between the parties to a transaction. Over the years, firms have employed Fix ‘engines’ to manage the creation and distribution of Fix messages, both internally and externally.

However, the rapid growth of high-speed trading, with the attendant capability to span continents, has required firms to extend their Fix engines into a ‘Fix infrastructure’ or ‘ecosystem’.

To address issues associated with high-frequency trading, FPL has created a High Performance Interface Working Group, organized into sub-groups, which will focus on specific aspects where the fit-for-purposefulness of Fix for high performance financial transactions can be improved.

The adoption of Fix by trading venues is accelerating as Fix, which has achieved mass adoption for front-office equities trading, rapidly expands across the FX, derivatives and fixed income markets.

In addition to the Appia Business Centre, NYSE Technologies’ Fix software suite includes the Appia Fix Engine and TradeScope, a web-based tool that monitors Fix infrastructure and day-to-day trading activity.

“We intend to use Appia Fix engines as the main electronic trading entry point into the Mercado Integrado Latino Americano [the integrated Latin American market], with direct market access to Chile, Colombia and Peru,” said Claudio Larrain, managing director at LarrainVial, an Andean financial services firm, in a statement.

The Appia Business Centre contains a “risk rules manager” for establishing pre-trade risk
checks to mitigate operational risk and enforce trading limits.

“As we continue to leverage the growth in the region, we will rely on Appia Business Centre’s risk management and Fix monitoring functionality to manage electronic trading activity into the region and from the region into the U.S. markets,” said Larrain.

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