Fidelity rolls out Fix for fixed income

Fidelity Investments - a financial information exchange (Fix) pioneer for equities trading - is extending the connectivity protocol to support fixed-income trading for sell-side counterparties.

The Boston-based asset management firm has implemented the Fix protocol for most of its domestic, fixed-income trade life cycle – including the order, execution, allocation and confirmation steps – for two un-named counterparties, said Jon Jamen, vice-president for fixed-income trading systems at Fidelity Investments. Jamen said the service would be offered to other counterparties by the end of the year.

Fidelity is readying a new order execution system that will be partly run on the Appia Fix engine from Javelin Technologies – now part of Nyfix – and TradeWeb, said Jamen, who declined to identify any other third-party companies involved in the project.

But a source familiar with the project said to link Fidelity’s internally developed order management system with external Fix messages, Fidelity turned to the services of Tepin Information, a Fix consultancy based in Boston. Tepin delivered Java-based middleware and helped with the workflow design and integration phases of the execution capability, the source added.

Applying Fix to the bond trading lifecycle – particularly for funds validation and accounting – will save time and free-up traders, Jamen said. “I would also think that it definitely leads to more accuracy,” he added.

While Fidelity has taken a leadership role with Fix, Jamen said the real driver behind Fix for fixed-income trading is the Bond Market Association (BMA), which a year ago dovetailed its efforts with Fix Protocol (FPL) to create a common protocol for trading fixed-income securities. The resulting working group has readied a set of business practices for fixed-income trading that it hopes will be incorporated by FPL in Fix version 4.4 – due for release early next year – said BMA officials.

The mix of Fix and bond trading is “an efficiency and services play", said Larry Tabb, an analyst at research firm TowerGroup. The greater use of Fix for bond trading enables sell-side firms to better disseminate inventory and pricing information as well as move away from gathering fixed-income prices via the web, he said.