By Tim Healy, Global Marketing And Communications Manager, FIX Trading Community
‘As January goes, so goes the year’ is an old Wall Street saying. I’m certainly not going to make any stock market predictions for 2016, but can say with some conviction that the year is likely to be a busy one given how January has started.
2015 was an extremely active year for the FIX Trading Community. Nine new Working Groups were formed through the year, some of which will be mentioned in other articles in this issue. Whilst a number of these did concentrate on MiFID II, the growing global focus on Cybersecurity and Blockchain was not lost on the members as both topics were addressed with new Working Groups. The subject matter on each is wildly different and extremely far reaching. FIX has been lucky enough to call upon experts on each subject to act as Co-Chairs and tangible work is being done with people showing great interest in how FIX fits into these respective areas.
The Cybersecurity Working Group completed a review, updated and augmented a white paper with a set of security threat scenarios. The intent is to illustrate the proposals in the white paper with examples of possible strategies an adversary may employ to disrupt, imitate or modify legitimate traffic between electronic counterparties.
The Working Group has begun work on a number of other initiatives to further support its objectives and will look to engage with membership actively over the course of 2016. In addition to this work, a Regulatory Subgroup has been formed to monitor and provide insight regarding emerging global regulations dealing with cybersecurity.
In 2015, the Global Post Trade Working Group continued the strong momentum built up in 2014 as it looked to add different asset classes to the list of Recommended Practices using FIX in the post trade space. Equity Swaps, FX and Futures are all being addressed currently and there is also an initiative in the group to cross reference with the Digital Currency/Blockchain Working Group to look further at this technological revolution and the work both Working Groups are doing.
At FIX, we are lucky enough to have strong input from a very active global Buy Side Committee. 2015 saw the initiative to make the IPO order entry and allocation process more efficient and less error-prone gain greater momentum. The two vendors supporting this electronification became members of the FIX Trading Community and fully engaged with the work the Buy-side had been doing. A set of Best Practices was published in 2015 and the focus will now be to engage with the Sell-side to complete the process fully.
In Europe, there has been much talk and focus on MiFID II and timings and demands for all market participants, vendors included, as the industry looks ahead to early 2017. Much of the work that FIX has done over the years, promoting the use of standards, is key to what the Regulators would like to see from the industry. During 2015, further work on Execution Venue Analysis was conducted by the EMEA Business Practices Subcommittee. Under MiFID II, each broker will need to demonstrate where and why they send orders to a specific execution venue. Providing venue reference on each execution real time will allow clients to monitor precisely where their orders were executed. An updated version of the Execution Venue Reporting Best Practices was published in October 2015 and is focused on adding further clarity around Last Capacity and Liquidity flag definitions, as well as mandating all executing venues, including broker crossing and alternative trading systems, to supply valid Market Identifier Codes (MICs) on their executions. The group will further be liaising with the buy-side in the US, the original authors of this document, to ensure that there is continuity and collaboration going forward.
To finish, it would be appropriate to mention the work done by the various members of the Global Technical Committee. A new working group, originally called FIX Service Profile and then renamed FIX Orchestra Working Group, was formed to address the work of generating machine readable rules for FIX Specifications to improve operational efficiency and the value of the FIX Protocol by reducing the time and effort it takes to on-board, certify, and deploy new FIX connections with counterparties. Additionally, in November 2015, we announced the publication of two specifications by the High Performance Working Group published on Github. Although highly technical in nature, there is an additional need for a high performance interface for order routing and market data to support the modern trading venue – a real business need.
The work done on this encapsulates the spirit of the FIX Trading Community by addressing changes in the market place and making them accessible freely and publicly, allowing feedback from the market and developers. We strive to include people and will continue to do so and keep the Community and the market fully aware of the work that we do in 2016.
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Industry Collaboration In The Year Ahead
