An American buy-sider is calling for his competitors to use FIX Protocol for post-trade matching to make the messages the default industry standard.
Scott Atwell, manager of FIX trading and connectivity at American Century Investments and FIX Trading Community director, said there was growing adoption of FIX guidelines for the confirmation and affirmation of equity trades by sell-side firms, but more institutional investors needed to jump on board.
“I think the biggest pitfall is that this becomes an absolutely great solution that works really well for let’s say five buy-side firms and others don’t seem to pick it up,” he said at an industry breakfast, hosted by NYSE Euronext.
“FIX is a way to get things done and accomplish something in a really effective manner.”
FIX Trading Community is a non-profit, industry-driven standards body, with a family of messaging languages aimed at increasing transparency and operational efficiency, while reducing costs and risk.
Steve Grob, director of group strategy at Fidessa, said the trading solutions provider had also seen the use of FIX for post-trade growing rapidly.
“Since we announced our FIX post-trade hub back in August we’ve been inundated with calls,” he said.
“On a weekly basis, we see the dial turning and it’s really about everyone saying there is no competitive edge in doing it multiple different ways. Let’s do it one way and find other different areas to compete on.”
Atwell said even with seven or eight brokers using FIX, American Century Investment was already running over a third of their flow with FIX messages.
“I have another five that I’m activating in the next couple of weeks. Once I do that I should be over 75%,” he added.
Capital Group, one of the world’s largest investment management organisations, was also using FIX. However, Atwell said unless more buy-side firms used the standard for matching, it would just end up being one of many ways to communicate.
“The groundwork has been laid. You’ve got key global brokers that are fully enabled. Now what will really help the effort is for more buy-siders to get in there,” he said.
Post-trade focus
FIX Trading Community last month announced the formation of a Global Post-Trade Working Group – a forum where business and regulatory challenges in post-trade can be addressed through standards.
The global group brings together the existing Americas Buy-Side Post-trade Working Group with EMEA Post-Trade Working Group. Members based across the Asian markets have also joined.
The group will look into building on existing FIX guidelines for equities and provide recommendations for how FIX can be used in post-trade processing across other major asset classes.