A Vision for FIX - Can a FIX network be the solution to seamless trading across multiple markets?
Imagine a seamless flow from the opportunity through the trade, the fill, matching, settlement and confirmation. Now imagine this across multi-assets and multimarkets. RBC Asset Management’s Tom Brown thinks this reality is closer than we know using a flexible combination of OMS, FIX and EMS.
Imagine you are on the trade support desk, within your trade room, of a buy-side firm monitoring order flow. One of your Portfolio Managers has seen an opportunity flash on his desktop via an instant message from the head equity trader. He determines a buy of 50,000 shares should be executed for five portfolios. The Portfolio Manager enters a buy order in the order management system and sends it to the trade desk with the click of an icon. The equity trader picks the order and sends it to broker “A” as he was making the market.
The order comes back as filled to the trade desk and populates in the blotter. The order moves to ready status as a fully filled order, allocates across five portfolios and moves from the trader blotter to the trade support blotter. You now pick up the order and review details of the trade for accuracy. Having completed the review, you select the order and hit the icon for “prep post-trade” which applies the standard settlement instructions (SSI) to the trade. Having attached the SSI’s to the trade you hit the “send post-trade” icon and send the allocations and details of the order to the broker’s back office.
Your counterpart at the dealer will pick up the allocation and detail report. After reviewing for accuracy and confirming data points are complete, he sends back an “acknowledged” message that hits your blotter and changes the status of the trade from ready to matched/affirmed.
With the trade complete, you grab the finished trade and hit the send to accounting button, that sends the trade downstream. The trade flows to your book of records as a completed trade. It will also flow, at the same time, as a matched trade to your custodian who will pick up your trade across the five portfolios and process them as matched trades routing to your custodial accounts and through another stream funnel to the depository to complete the full trade cycle.
Imagine all those touches and the number of people involved, and then realize the whole cycle took less then five minutes to complete.
But why stop here? Why not the same functionality for the money market, fixed income, foreign exchange and derivative desks? A step further: all markets and all asset classes, globally. How do we proceed with flow and process?
Institutional Trading
A fully functional order management system (OMS) is essential to such a global, multi-asset, vision. This does not, however, preclude other levels of flow being developed, but you may risk gaps in compliance checks, limitations to the type of messaging or other aspects of the cycle. Let us review both scenarios.
We determined through discussions with our Institutional OMS vendor, Charles River Investment Management System (Charles River IMS), that for our purposes of developing “one stop processing”, fully integrating the application with access to the appropriate modules would move us towards this goal. We already had some of the tools built during our initial rollout of the application. For example: Pre-trade compliance and segregation of duties for user functionality allows an order to have breaks during flow that enable the various participants to perform their tasks in the cycle.
Portfolio Managers are able to trade a single name through their blotter or pass multiple orders through model changes per bucket. The biggest advantage is the ability to send program trades covering 100’s of orders from the managers workbench with a few key strokes, passing through compliance and conducting mandate checks verifying trades are accurate within seconds.
Once the orders hit the trade desk, the same ability allows our traders to grab one order or a whole program of orders and send them to "The Street" within seconds, to one or many dealers via the Charles River FIX network. This allows the desk extra time to work more difficult orders or simply to get orders to market in an efficient, timely manner for our dealers to vet.
Next was incorporating the right modules that would interface with the blotter builds we completed for trade support and back office functionality. Allocation and trade match modules added the ability to accept executions and breakdown the trade details in a manner that made the information usable for back office requirements, again using the FIX network. Since we trade at the bulk level, yet allocate at the portfolio level, this additional flexibility allows us to match with bulk numbers and also break out the order at the detail level for the allocation reporting and matching.
