FPL News Sept 2011

FPL: Supporting the Trading Community

Once a conversation point reserved for technologists, the wide scope of activities currently being conducted by FPL is now generating wide industry attention. FPL is addressing the real business issues impacting multiple areas of the trading community on a global scale. Here is a brief insight into what the organisation has been working on over the summer months and what it will be delivering to market participants later in the year. 

Understanding Buy-Side Needs

To understand and more effectively support the changing needs of the buy-side trader, FPL has formed buy-side focused working groups. Earlier this year, in an effort to achieve a more consistent response from the broker-dealer community, regarding broker reporting of the execution venue on each fill, FPL published a best practices document to help resolve these challenges. Over recent months, FPL has worked closely with buy-side representatives as they have approached their brokers to encourage adoption of these practices and this activity is planned to continue as we progress into quarter 4. The FPL EMEA Business Practices Subcommittee is also currently reviewing the recommended best practices so they can also be encouraged for adoption within the local market. 

An additional area currently under the spotlight, by the FPL Americas Buy-Side Working Group, is post-trade allocations. Presently many firms are identifying a common point of failure when it comes to allocating and confirming trades using the current model. To help alleviate this risk the group is exploring the use of bi-lateral FIX for equity allocations. FIX offers functionality within this area and the group is looking at how it could increase adoption. The initial work has focused on seeking to develop a common method that is acceptable to both the buy and sell side community utilising FIX and commencing the creation of best practice documentation. We look forward to hearing more on this initiative in the coming months. 

Raising Awareness of Risk Management

Early in 2011, the FPL Risk Management Working Group released an initial set of guidelines which recommended risk management best practices in equities electronic trading for institutional market participants. These were made available to the industry for review and since this time very valuable feedback has been achieved. Earlier this summer the group updated the guidelines and also extended their scope to support derivatives trading. The enhanced guidelines were shared with the FPL membership for their review during the month of August. This included review by the FPL EMEA Business Practices Subcommittee to ensure issues impacting the region were also considered and FPL is aiming to release the updated guidelines to the market in late 2011. 

Additional to this, the FPL Americas Buy-Side Working Group has also commenced an initiative focused on risk mitigation. The group is looking at the potential to increase the use of test symbology for all electronically traded asset types to encourage more secure, reliable and compliant business processes. We look forward to hearing more about this initiative as it progresses.