FIX Protocol Limited (FPL), the body responsible for the FIX financial message standard, has released new guidelines which aim to standardise post-trade processing practices for both US and non-US equity markets.
The document, devised by FPL’s Americas Buy-Side Working Group, is designed to cover the placement of equity orders globally, including trade affirmations, allocations and reconciliations, between buy- and sell-side firms.
According to FPL, the new guidelines will increase straight-through processing, enhance transparency through ID-linked availability from placement to pre-settlement, improved availability and reduced costs.
“The transparency made available by improved traceability from trade execution through to pre-settlement offers exciting possibilities for reducing errors and improving trade matching rates while minimising costs by leveraging existing investments in FIX infrastructure,” said Brian Lees, co-chair of FIX Protocol’s execution venue subgroup and manager of application development at the Capital Group Companies.
“The current [post-trade] process is complex and requires considerable human intervention,” said David Tolman, technology manager at Greenline Financial Technologies. “The FIX infrastructure, knowledge and data from the extremely successful use of FIX in order processing can now be leveraged in the post-trade process.”
Greater FIX adoption in post-trade processing is part of the recommendations set forward in FPL’s investment roadmap, which it produced in conjunction with other standards bodies. The roadmap is designed to inform market participants on guidelines for which standards are most suited to support business processes throughout the various stages of the investment lifecycle.
Lees’ execution venue subgroup is also devising guidelines on how US brokers should report back on trades after they have been executed, which are also due this quarter. This includes whether a trade was executed on a principal or agency basis and consistent tagging on the venue of execution used.