Business FIXation

Proprietary exchange protocols

The electronic trading technology is in use for several decades. Its popularity and indispensability lies in its following prime features:

• The ability to affect the market behavior by removing the physical constraints like the number of market participants, their locations, time zones, currencies etc.
• The ability to substantially reduce the system deployment and maintenance costs.
• The ability to support direct interactions among buyers and sellers by eliminating a need for intermediations.
• The ability to build flexible trading systems, which can act as Buy-sides, Sell-sides or a combination of both
• The potential to continuously evolve with higher efficiency and speed due to advances in electronics and computer technologies.

With the progress in electronics and computer technologies, exchanges in different parts of the world came up with their own proprietary protocols to regulate their client connections and the trading mechanism. However, with increasing globalization, the proprietary protocols became a major hurdle in achieving seamless order routing, providing direct market access and reducing message latencies and hops.

The need for STP

The profitability and performance of traders depend on their ability to access liquidity and execute against it in a cost effective way. With improvements in the internet technologies, the proprietary exchange protocols became a major hurdle in accessing markets in different parts of the world. The need for increased Straight Through Processing (STP) became a prominent need with emergence of automated trading systems, which can place thousands of orders per second based on algorithmic trading strategies. The STP aims to provide Direct Market Access (DMA) and reduce message latencies and hops. It also aims to streamline the entire trade workflow spanning over Indication Of Interests (IOI), placing appropriate orders at profitable places, tracking of order execution processes and generating reports. STP also addresses concurrent market data analysis in order to understand the market trends in the real-time and initiate situation dependent actions for profitability.

The rise and success of the FIX Protocol

An important aspect of the challenge of achieving higher STP levels is the access to global markets in a streamlined manner. It required complete standardization of the trade workflow in terms of some global protocol. The FIX Protocol emerged from these requirements.

The Financial Information eXchange Protocol (FIX Protocol) has evolved from the collaborative efforts of Buy and Sell-side financial institutions and with an intention to streamline the trading process for global connectivity and to overcome the hurdle of the proprietary exchange protocols. The FIX Protocol is a set of open standards for the exchange of pre-trade, trade and post-trade messages and specifications for establishing trading connections. These standards are based on the solid practical knowledge and experience of its framers and they successfully cater to the requirements of all market participants. The popularity and use of the FIX Protocol is continuously growing, making it an industry standard on the global scale.

The success of the FIX Protocol lies in its versatility.

• It is independent of networking protocols and software development platforms.
• It can enhance the performance of the old and new electronic trading systems by making them capable for global connectivity, DMA and efficient STP of business messages.
• The FIX compliance helps to leverage the FAST (FIX Adapted for STreaming) Protocol for a quick access to the large real-time market data feeds with reduced end-to-end latency and improved bandwidth scalability. The FAST Protocol uses the message syntax provided by the FIX Protocol for broadcasting the market information to market participants not only on high bandwidth but also on narrow bandwidth lines. It enables significant data compression with very little data encoding and decoding overheads.
• Lightweight and fast deployable Execution Management Systems (EMS) are another success of the FIX Protocol.

Why to FIX business?

The FIX Protocol functions at two levels - session and application. The session level establishes, maintains and terminates the connection between the parties and provides recovery mechanisms for lost messages. The application level deals with the business related contents, which the organizations can implement as per their own business logic. This inbuilt flexibility of the FIX Protocol makes work across all asset classes and for all types of market participants.

With the huge size of the FIX community, FIX has now become a globally recognized messaging standard. It is a gateway to the single largest community of traders, brokers and exchanges all over the world. As the same FIX compliant trading infrastructure can work for all FIX compliant counterparties, the FIX Protocol can provide increased revenue opportunities at reduced infrastructural costs.

We FIX businesses for greater STP levels

FFS specializes in consulting on the FIX Protocol. It covers activities like FIX awareness and training programs, FIX software development, FIX implementation benchmarking and certification and system integration. The implementation of the FIX Protocol from scratch requires huge development and real-time testing costs as well as a long deployment period. At FFS, we have a comprehensive suite of FIX products and modules which significantly cut down the solution development and testing costs. These products and modules take care of all FIX Protocol intricacies and enable clients to focus on their core business logic.

The motto of our FIX solutions is “Easy to develop and fast to deploy”. Expanding the market reach and maintaining market lead are the most sought goals for any trading firm. Our FIX solutions can help you achieve these goals by making your trading system compliant with new markets and by responding to changing interfacing needs really fast.

Reaching non-FIX markets

The number of FIX compliant market participants is continuously rising. However, non-FIX compliant markets can be equally important to you. Our FIX solutions take care of these needs too. We have successfully extended the FIX powered trading systems beyond the realm of the FIX, to the non-FIX compliant exchanges all over the world. We can make your trading system compatible with the FIX as well as non-FIX compliant markets and help you to capture business opportunities in both realms.