FIX Trading Community has published updated guidelines for electronic trading on swap execution facilities (SEFs) and organised trading facilities (OTFs) that will execute OTC derivatives in line with post-crisis G-20 rules.
The guidelines, which also cover bond transactions, are designed to reduce costs and promote efficiency for market participants. The rules will help the industry prepare for cross-asset class trading on SEFs, which is expected to develop when the new venues launch later this year.
The updated guidelines now include different permutations of cross-asset trades used within the fixed income markets and the electronic booking of voice trades. Additionally, the standards include provisions for legal entity identifiers and identifiers for central counterparties.
“By encouraging the use of FIX for fixed income across the broad range of financial instruments covered by the updated guidelines, we hope to witness similar results in this market, beginning with the SEF go-live later this year,“ said Sassan Danesh, co-chair FIX Trading Community Global Fixed Income Subcommittee and managing partner, ETrading Software.
The venues launching as SEFs under the US Dodd-Frank Act are expected to become operational from 2 October, depending on how quickly the Commodity Futures Trading Commission can register SEF applicants. In Europe, the OTF category will be enshrined in MiFID II, expected to come into force from 2016.
‘FIX has played a huge role in revolutionising the equity markets, enabling new trading venues to establish themselves easily, offering cost-efficient connectivity to trading partners across a fragmented marketplace,” Danesh said.
The new standards will be explained in detail at the FIX France regional meeting in Paris on 18 September.