FIX Protocol, the non-profit, industry-driven standards body for global electronic trading community, has published updated recommended guidelines for the use of FIX for post-trade processing.
The updated guidelines come as the industry’s post-trade infrastructure faces increasing regulation and shorter settlement cycles. Investment managers and broker dealers are focused on using mutually agreed standards to deliver higher efficiencies and lower costs. The FPL Post-Trade Processing Guidelines were originally disseminated in April 2012 by the FPL Americas Buy-side Working Group to help address these challenges, and enable firms to leverage and extend their existing FIX investments into the post-trade environment, and also benefit from increased straight-through processing (STP).
The guidelines are now being implemented globally by investment managers, broker dealers and vendors. These firms have provided significant feedback throughout the implementation process, which has been incorporated into the guidelines as they have been revised and extended.
FIX Protocol said the guidelines have been produced by market participants keen to encourage the increased use of FIX for post-trade processing with the intention of offering the following:
– reduced dependency and risks associated with having a single approach for processing trades in the post-trade environment;
– a standardized approach to workflows, reducing complexity and in turn the costs and the time required for issue resolution;
– the ability to eliminate matching ambiguity and the need for complex matching algorithms through the use of standardized trade identifiers;
– increased guidance about fee types, helping to reduce trade-breaks which in turn reduces costs and processing time;
– detailed settlement instructions for confirmation processing, reducing management costs and potential errors
The guidelines have been specifically designed to facilitate phased implementation by both the buy-side and sell-side communities.
Commenting on the guidelines, David Tolman, Chair FPL Americas Buy-side Post-Trade Working Group, Professional Services, Greenline Financial Technologies, said: “We have witnessed major progress in this initiative in the last 12 months, thanks to substantial industry-wide participation. Through market feedback we have been able to provide more detailed guidance about how confirmations and allocations can be delivered using FIX, including further information about how settlement instructions and market fees can be represented. Through industry collaboration we are now moving forward at a very rapid pace.”
Commenting on the enhanced guidelines, Scott Atwell, FPL Director and Manager of FIX Trading and Connectivity at American Century Investments added: “Extending the use of FIX to post-trade completes the communication cycle between buy-side and sell-side firms. After using FIX for the order and execution processing, a buy-side firm can simply send a FIX Allocation with account-level breakdowns, and the sell-side firm will send a FIX Confirmation message for each account. After successfully matching, the buy-side firm then responds with a FIX message to affirm each confirm creating a succinct process with an audit trail. The benefits include efficiency gains, improved straight-through processing, and quicker identification of issues, all of which provide significant risk reduction and cost savings.”
Michael Fiscella, executive director at Morgan Stanley added: “Post trade STP standardization using the FIX Protocol is increasingly important for our clients as they seek to enhance operational efficiencies, streamline processes, and improve resiliency.” To view the guidelines please click here.