A buy-side working group launched by FIX Protocol Limited (FPL), the standards body for FIX financial messaging, has released a set of guidelines detailing the information they would like to see in the post-trade reports provided by brokers.
The guidelines have been developed to ensure consistency of reporting among brokers with regards to the nature of liquidity and identification of the execution venue used for each completed trade.
They were created by buy-side representatives spanning the US, Asia and Europe, although the initial guidelines are specific to data issues that are only relevant to the US.
“These guidelines were developed based on the input and experiences of several buy-side firms. It is the expectation of the group that this will result in consistent information regarding the manner in which orders are executed in an increasingly fragmented marketplace,” said Bill Rosner, application development manager at mutual fund manager The Capital Group Companies and co-chair of the FPL buy-side execution venue working group.
The need for standardisation in trade reports relates to the information on the type of trade, amount traded and method of data delivery from the broker to the buy-side.
The group identified data relating to the final destination of an execution, the capacity of a broker for the execution, in terms of whether a trade was executed on an agency or principal basis, and the nature of liquidity – i.e. passive or aggressive – that should be entered by brokers in FIX fields.
According to FPL, this data will help increase awareness among buy-side traders of where their orders are being filled and whether the venues used are optimal for each trade. It will also help them to determine whether the routing decisions were made to the benefit of the broker or the client.