FIX: Streamlining post-trade solutions
By Jean-Remi Lopez
Jean-Remi Lopez of SunGard Global Trading responds to FIXGlobal on how FIX enables post-trade teams to provide more accurate and timely information to decision makers, benefitting their institutions.
How has FIX added value to the world of trading?
There is no doubt that FIX has brought a fundamental change to the way orders are placed and managed in financial markets: a collection of proprietary protocols have yielded to a standardized communication protocol. However some resistance remains especially in the world of post-trade processing.
How can you explain this resistance in the post-trade processing arena?
Every post-trade team is unique in the way it is organized. From a systems perspective, post-trade processing involves a collection of different systems and processes that make up a complex environment. In most organizations, it also includes varying degrees of manual processing. Post-trade workflow often includes a series of batches – epitomized by the “end of day” – rather than immediate processing.
For all its features, FIX remains a real-time messaging system and may not seem, at first glance, an appropriate communication tool for the post-trade environment. However, the sustained drive for Straight-Through-Processing (STP) and the need to reduce transaction risk has driven systems increasingly to interact with each other in a more synchronous fashion: information has to get disseminated immediately post-trade to a large set of systems.
What has been your experience using FIX, especially at the post-trade level?
SunGard has now fully adopted FIX, with a large majority of our clients exchanging FIX data flows in and out of our products. However, this adoption was not completely optimized: too many individual exchange specifics remained in our FIX ‘Rules Of Engagement,’ which were sometimes difficult to comply with for our clients.
SunGard’s approach is now to offer our clients and their FIX counterparts,‘Rules Of Engagement’ that are in line with FIX best practices, whether it is about collecting a plain-vanilla equity order, a derivative order, a client allocation, or broadcasting market data.
At the post-trade level SunGard has experienced a drive towards interconnection at first hand. We found that the first push for using FIX within our solutions came from the derivatives market. With its growing volumes, and the requirement for rapid updating of position and risk keeping systems, timely data flow is crucial. This required our applications to connect directly to clearing houses in order to retrieve trade information immediately upon execution.
Previously we had developed a clearing house gateway which interfaced a set of market-specific communication protocols to our own internal protocol. As our offering evolved, and more modules were integrated into our offering, the proprietary protocol started to show its limitations. In addition, we realized that the same clearing house gateways were developed multiple times, often once per component.
Accordingly, we decided to use a single clearing house gateway for all our products and we made the decision to use the FIX Protocol to exchange the information between our components. This enabled our developers to focus much more on covering clearing house functionalities rather than expanding the scope of the ageing internal protocol.