Why FIX?

• What is the FIX Protocol?
• What is FAST?
• Why FIX?

What is the FIX Protocol?

The Financial Information eXchange ("FIX") Protocol was developed in 1992 as a result of collaboration by select participants from worldwide banks, broker-dealers, exchanges, industry associations, institutional investors, and information technology providers.

These market participants shared what was to be a powerful vision to establish a common, global language for the automated trading of financial instruments, both for the Sell Side and Buy Side.

The resulting ‘FIX’ protocol is a series of messaging specifications built specifically for the real-time electronic communication of trade-related messages to give firms fast, flexible, standards-based trading connectivity.

In 2008 the size of the equity markets spanning the US, Europe and Asia Pacific that benefit from the FIX protocol, reported an annual turnover of more than $113 trillion. Additional to this, a significant number of emerging equity markets, the global fixed income, exchange-traded and OTC derivative, and foreign exchange markets also benefit from the protocol.

In 2010 and nearly 20 years on, it’s fair to say the ubiquitous global uptake and network effect of FIX has no doubt eclipsed the early visionary’s roadmap for the specification; a truly global community actively evolves and propagates the specification through prolific usage, forums and conferences.

It is actually the strength of this support system and its willingness to give meaningful insight, coupled with the protocol’s extraordinary ability to evolve, infiltrate additional asset classes and adapt to the demands of its users, that underpins the great success of FIX.

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What is FAST?

FAST (FIX Adapted for Streaming) was developed by the FIX Protocol organization in 2006 to bring greater benefits of standardization to market data and deliver further optimized performance for the exchange of electronic financial information. Built around a data compression algorithm, FAST significantly reduces bandwidth requirements and latency between sender and receiver.

FAST implementations are used by firms to gain competitive advantage in the latency and bandwidth race. FAST-encoded-FIX delivers smaller transaction messages and faster execution, and lowers the cost of exchanging market data.

FAST works particularly well at improving performance during periods of peak message rates. While it has grown out of market data, FAST is applicable and can be used with all FIX messages to offer flexibility in the way that FIX data is formatted for transmission.

Current generation CameronFIX is fully optimized to deliver the greater benefits of FAST.

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Why FIX?

Constantly changing market dynamics on a worldwide-scale are presenting even greater challenges for today’s market participants. Continued volatility, fragmentation and emerging venues as well as new asset classes are resulting in a rethink in the pursuit of liquidity. What is clear and apparent for most, is the criticality that the FIX protocol will play in this strategy.

Widespread adoption of the FIX protocol has undoubtedly improved efficiencies of capital markets and in doing so made them more dynamic and ultimately more equitable. FIX has markedly increased competition among brokers and significantly reduced trading costs for all market participants via the charges in the form of commissions and fees along the trading chain.

Importantly FIX connectivity has expanded the scope and quality of services provided by brokers, thereby affecting the level of flow-on activity and liquidity in secondary markets.

FIX has also made cross-border, cross asset trading far more accessible.

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Applying the FIX Specification

FIX is a flexible means of handling many types of information. It is platform-independent so it works with many types of systems. FIX can be used to communicate messages such as:

• Indications of Interest
• Orders and Order Acknowledgment
• Fills
• Account Allocations
• E-Mail, News, Program Trading Lists
• Admin Messages

While the FIX specification is open and free (supported by the efforts of the FIX Protocol Organization www.fixprotocol.org), implementing FIX requires investing in a reputable FIX engine, which can mean the difference between a start-and-stop experience and a positive, seamless solution.

An increasing number of firms rely on the specification to transact in an electronic, transparent, cost efficient and timely way. Considered the de-facto messaging standard for pre-trade and trade communication globally within the equity markets, FIX is used by some of the world’s largest Sell Side and Buy Side firms. The standard is also experiencing rapid expansion into the post-trade space, supporting Straight-Through-Processing (STP) from Indication-of-Interest (IOI) to Allocations and Confirmations. From this foundation, the protocol continues to gain momentum and expand across the Foreign Exchange, Fixed Income and Derivatives markets.

Increased global adoption of quantitative trading strategies has resulted in the need for fast and flexible access to greater depth of market data with the lowest possible latency. To meet this demand Stock Exchanges worldwide are continuing to adopt FIX to meet changed market conditions and member demand for FIX connectivity. FIX-enabled exchanges today include Singapore Stock Exchange, Tokyo Stock Exchange, NASDAQ, Deutsche Bourse AG, New York Stock Exchange, Warsaw Exchange, Australian Stock Exchange, Chicago Mercantile Exchange, DGCX, JSE Limited, London Stock Exchange, MCX, MCX-SX, ICE, NYMEX and Shanghai Stock Exchange.

There are numerous advantages for utilizing one FIX solution over the multitude of Exchange proprietary protocols, namely centralised maintenance of FIX is much more efficient in the event of additional new functionality, with significantly reduced time-to-market for any upgrades.