With Laura Craft, Director, Equities & Fixed Income Product Strategy at Traiana and Co-Chair of Global Post Trade Working Group, FIX Trading Community.
After updating and reissuing the guidelines for Equities in 2013, did you see a significant increase in buy-side engagement?
The buy-side that has really driven FIX for post trade has tended to be some of the large US-based asset managers. The initiative was kicked off a number of years ago by the group. Their early input in drafting of the guidelines was no doubt advantageous and their continued support to the initiative has assisted in encouraging more firms to adopt FIX allocation and confirmation messaging. As we draw a close to the final quarter in 2014, we are now seeing some European asset managers now adopting FIX. The continued adoption of this will be a focus for the GPTWG as we move forward into 2015.
Has there been much push back from the sell-side on this initiative at all?
The sell-side has been largely supportive of the initiative, and on the whole has implemented FIX in their post-trade process relatively seamlessly or in some cases have utilised middle-ware vendors to assist in the transition to a new messaging protocol. Since FIX is so prevalent in the front office, the protocol is seen as a natural extension to the middle office for allocation and confirmation processing. The ability to leverage the existing FIX infrastructure has proved to be cost effective and another persuasive argument for the sell-side to be involved.
What have been the challenges from region to region for Post-Trade FIX workflow?
The main challenges that the working group has noticed has been the education process across the regions and the staggered regional rollout of FIX on the buy-side. Certainly, Europe and Asia Pac tend to have very similar processes that can be leveraged, yet North America has traditionally had a different workflow and this has been more of a challenge for some firms to implement FIX – notwithstanding the typically high volume within the North America region.
At the beginning of 2014, the plan was to broaden the asset class for FIX in Post-Trade. Has there been success with this initiative? If so, in which areas?
Once the FIX Post Trade guidelines were signed off for Equities, there was a conscious effort from the GPTWG to ensure that additional asset classes were to be included. Various sub-groups were created including Equity Swaps, FX and Fixed Income. These have been extremely successful and guidelines are in the process of being finalized and signed off across all of these instruments. It is important that the momentum these sub-groups have are followed through on.
The Fixed Income market has long been OTC. If there is a move towards more electronic trading, will that have a natural impact on the Post-Trade space?
Traditionally the Fixed Income (FI) post trade space has been extremely manual. However, as some buy-side firms have now adopted FIX post trade across both equities and FI, there is a shift towards greater automation in the post trade space. Firms are now investing in middle office systems and are needing to improve processes to cope with increased volumes.
2015 is just around the corner. Where do you see the main focus for the Post-Trade Working Group being?
Once all of the sub-groups have signed off their respective guidelines for the additional asset classes, one of the key roles of the GPTWG is to continue to drive adoption. The success of the group is only measured by usage and more buy-side firms need to be encouraged to review the efficiency statistics of those firms that are now fully functioning with FIX for allocation and confirmation processing and feel confident that they can emulate their improved efficiency and reduced cost of processing. There has been great participation from all market participants in the GPTWG – buy-side, sell-side and vendors have all been very actively involved. As mentioned earlier, pushing for greater adoption will be important task as we move forward with the likelihood of shorter settlement periods becoming normal as the year progresses.