Reducing settlement times and streamlining post-trade processes were key issues in new FIX Protocol Limited (FPL) global post-trade processing guidelines released today, according to a senior member of FPL’s post-trade team.
Major factors behind the updated guidelines included reducing settlement for equities trades from three to two days and the central clearing of OTC derivatives instruments.
According to David Pearson, co-Chair FPL EMEA Post-Trade Working Group and head of post-trade services at trading technology vendor Fidessa, the front-office efficiencies developed in equities trading over recent years are permeating through to the back-office and into other asset classes.
“T+2 settlement is a major driving force behind these changes and the buy-side and sell-side are keen to ensure they can process trades in a day shorter settlement environment. FIX and workflow standards will help achieve this,” Pearson told theTRADEnews.com.
One major tenet of the changes was the standardisation of workflows to reduce complexity and costs for both buy- and sell-side participants. In particular the need to broaden FIX messages to include a greater range of information was central to the updated guidelines.
One such extension, Pearson said, included provisions to automate the calculations of charges associated with financial transaction taxes (FTT) in Europe.
“Buy-side participants were keen to include data in FIX messages about fees for transaction taxes, such as those in France and Italy, so they can calculate and agree fees traditionally managed by the sell-side,” he said, adding that preparing for a pan-European FTT was also a consideration in upgraded the FIX standards.
The guidelines will be implemented by investment managers, broker dealers and vendors internationally and these same firms have provided feedback to improve the guidelines as they are revised.