The FIX Protocol: An Overview
The Future of the FIX ProtocolThe future of FIX includes expanded asset classes and new formats, but equities players will likely not use the standard beyond its current incarnation.
In a new report entitled , Celent Communications looks closely at the development of the FIX protocol, including its current and potential uses. The protocol is now the closest thing the securities industry has to a full-blown standard, and we expect grow in usage, especially as it becomes a major factor in the industrys move towards Straight Through Processing.
FIX is flexible, having been used by firms for various functions, from Indications of Interest (IOIs) to administrative messages. FIX is also platform independent, and its benefits have been well reported. In keeping with these benefits, an entire new market inside financial services technology has opened up.
But FIX is not a panacea for electronic communications in the financial markets, according to Fritz McCormick, author of the report. Its purview is largely the trade creation and execution space. The post-trade process is still dominated by proprietary standards or none at all. Further, FIX has yet to take serious hold in asset classes beyond equities, although recent versions have been expanded to include foreign exchange and fixed income. Equity firms using FIX may not have the stimulus or desire needed to evolve the protocol, possibly creating a divide among users; those using new formats for expanded trading and technological capabilities, and those using older versions that work well in their trading environments.
Mr. McCormick adds that even with some shortcomings the FIX protocol will continue to act as the main force behind increasing automation in the securities industry. Firms looking to cope with issues such as STP and T+1 will need to embrace standards like FIX to help make automation in the securities industry a reality."
A Table of Contents is available online.
of Celent Communications Institutional Securities & Investments and Wholesale Banking research services can download the report electronically by clicking on the icon.