FIX Protocol’s Many Benefits – Making adoption of FIX all the more easier

By Daniella Baker

It is a fact that the FIX Protocol generates significant cost savings for the Global Financial Services Community. This fact is further attested by the findings of a recent study, explains Daniella Baker, FPL Marketing and Communications Manager of FIX Protocol Limited.

The past 12 to 18 months sent shockwaves through the very core of our industry. As the world’s financial markets continue to grapple with the impact of the global economic crisis, achieving greater cost reductions and generating increased efficiencies are goals that are riding high on most corporate agendas. During this period the landscape has shifted, regulatory changes have been implemented and new trading practices have emerged. As we move swiftly towards the close of the first decade of this millennium, FPL is proud to release a study entitled ‘The Benefits of the FIX Protocol’, which was produced by Oxera, one of Europe’s leading independent economic consultancies.

Oxera worked closely with Barry Marshall, previous Co-Chair of the FPL EMEA Regional Committee and Jim Northey, Co-Chair of the FPL Americas Regional Committee and Co-Founder of the La Salle Technology Group to deliver the report. The study explores the benefits that flow from the use of FIX in capital markets and amongst other findings, identifies the significant cost savings, reduced operational risk and the longer-term value that greater use of the protocol could deliver in terms of generating increased market efficiencies.

The timing of this study comes at a very poignant point in the history of FIX, as we are witnessing winds of change in adoption. FIX was originally developed as a buyside to sell-side communications tool, however trading venues and regulators across the globe are starting to take note. Listening to their user communities, they too are expressing significant interest and in many cases implementing the protocol.

A prime example of this is the Investment Industry Regulatory Organization of Canada (IIROC) and their plans to offer a new FIX-based market regulation feed specification for market surveillance and transaction reporting.

As the FIX Protocol has developed, its functionality has been significantly enhanced to provide support across the trade lifecycle for multiple asset classes. To put the impact of FIX support into perspective, the study identified that the size of the markets that currently benefit from the protocol now include the USA, Europe and Asia- Pacific equity markets, which in 2008 had an annual turnover of $113 trillion, in addition to a significant number of emerging equity markets; the government and corporate debt securities markets, which had an outstanding value globally of $83.9 trillion in June 2009; the exchangetraded derivatives markets, with notional amounts in the USA, Europe and Asia-Pacific in June 2009 of $63.4 trillion and the global over-thecounter (OTC) derivatives markets, with notional amounts in December 2008 of $591 trillion.

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