The Fixed Income Connectivity Working Group (FICWG), a body set up to encourage the use of the FIX Protocol for derivatives trading, has announced it will be supported by operators of fixed income trading venues.
FICWG was established in June by a number of financial institutions, including BAML, Barclays Capital, Credit Suisse, Deutsche Bank, Expand Research, Etrading Software, Goldman Sachs, J.P. Morgan Chase, Morgan Stanley, Royal Bank of Scotland and Société Générale.
Its aim is to create recommended best practices for the trading of interest rate swaps and credit default swaps via the FIX Protocol.
The initiative’s latest supporters are all firms that expected to register as swap execution facilities in the US – a new type of trading venue set up by the Dodd-Frank Act as part of efforts to reduce risk and increase transparency in the over-the-counter derivatives market. These include BGC Partners, Bloomberg, Dealerweb, Eris Exchange, GFI Group, ICAP, ICE/Creditex, MarketAxess, Phoenix Partners, Tradition, Tradeweb and Tullett Prebon.
Most sell-side firms use proprietary application programming interfaces to connect to venues or counterparties, which can be expensive to manage and are most suitable for maintaining a small number of connections. According to the group, the use of FIX will result in a lower cost of technology ownership, easier connectivity between market participants, faster time to market for new products, and better support for multi-asset trading.
“The FICWG group initiative is a significant step in the right direction. Standardisation of protocols in the trading landscape helps to promulgate an orderly and fair market access and is another demonstration of the fast response of trading venues and market participants to the mandate of our regulators and the need of our industry,” commented Yann L’Huillier, group CIO, Tradition.
Since its launch by Etrading Software and Expand Research earlier this year, the FICWG has worked with FIX Protocol Limited (FPL) to garner industry support and form the best practice guidelines. The draft guidelines are currently being reviewed by FPL’s members and final proposals are expected in the coming months. The group added that Commerzbank Corporates & Markets, HSBC and Royal Bank of Canada joined as founder members.