Younger traders would be surprised to know that as recently as the 1990s, information was passed on between broker-dealers and clients over the phone, which meant it could easily be lost or routed to the wrong traders. So the FIX protocol was designed by Robert Lamoureux and Chris Morstatt to allow electronic communication of data between Salomon Brothers and Fidelity Investments in 1992. Since then, FIX has become the standard service in the global equity markets as well as making major inroads in foreign exchange and other financial markets.
FIX can be used by the buy side, such as institutions, and brokers or dealers on the sell side. If you think of SWIFT as the standard for back office messaging, then FIX is the standard for the front office. It is seen as one of the broadest, deepest and most reliable networks out there. It has a global network of more than 1,500 member firms and provides the ‘buy’ institutions with access to worldwide brokers. Its Order Routing Direct capability can support low latency point-to-point FIX connections using the same infrastructure supporting the hub and spoke order routing. It has won the best low-latency trading network category in the 2016 Buy-Side Technology Awards for meeting buy-side firms’ daily requirements while also addressing their upcoming requests. That is no mean feat as there were 280 entries assessed by the independent panel of seven judges looking at areas such as the broadness of the connectivity, proximity to exchanges and the ability to manage substantial traffic volumes without needlessly adding latency.
Continued Expansion of Services
Since NYFIX, it has continued to expand and offer new services such as web-based monitoring of connection statuses and live order flow, Transaction Cost Analysis reporting, Indication Of Interest, and Trade Advert services. It continues to evolve so that local hubs can support in-region message flows whilst remaining interconnected for cross-region flows. It is also looking at where the industry is moving so it can anticipate their needs such as post-trade services as well as the need for services like transaction cost analysis in real-time, surveillance and reporting. So NYFIX may develop from a network into a platform so it can deliver these on-demand services.
NYFIX Matching can be accessed by buy-side institutions through their existing NYFIX connections so they have a fully managed service. It allows the buy-side to allocate and match trades with more than 700 global brokers. Mr Bentley said he saw the expansion of NYFIX services into post-trade as an important part of its development as well as being a valuable resource for its members.