New FIX specs raise challenge to FpML

The new version includes dual syntax for the standard tag-equals-value FIX grammar and for XML-based FIXML. Version 4.3 covers 'streetside' trade capture reporting and enhancements to security and trading session definition. It also provides extra support for Asia/Pacific and Japanese regional requirements.

In the fixed-income area, FIX4.3 added fields and attributes but no new messages, said Scott Atwell, manager of FIX trading and connectivity at American Century Investments and buy-side chairman of the FIX Technical Committee.

The group also worked with the Bond Market Association (BMA) in developing the extensions, said Michael O’Conor, managing director of global client connectivity and order management at Merrill Lynch and director of FPL. The association is working with Tradeweb and Jordan & Jordan to develop a standard fixed-income messaging protocol.

"In FIX 4.2, we reserved some tags for an initial beta test of fixed-income processes," O’Conor said. "We reflected maturity date, a benchmark and a spread to that benchmark. [For FIX 4.3], the fixed-income group then sat down and developed much deeper requirements along the trade life-cycle process. We have done a lot of work with the BMA to have appropriate representation."

Although it was rumoured that the association was moving away from FPL’s efforts, O’Conor said this was not the case. "We’re working very closely together, so what we end up with is a common protocol supported by all. I view [BMA’s protocol initiative] as complementary, not competitive."

By incorporating derivatives coverage, FIX now touches on areas covered by other protocols, namely FpML, said John Treadway, senior vice-president of marketing and business development at Financial Fusion, which plans to have a 4.3-compliant full connectivity suite out by November.

"With FIX rapidly becoming a global standard, it seems very clear that FPL wants FIX to be a front-office standard for all product types, which is very good for firms," Treadway said. "What’s interesting about this is, in FX swaps and other areas of support, they have really extended in a direction that puts pressure on the FpML organisation. That was the first question that everyone had about version 4.3."

But Atwell said FIX serves exchange-traded derivatives and mostly covers pre-trade and trading in the life cycle, while FpML is focused on over-the-counter derivatives' post-trade communications. He said he was not familiar with SWML, the XML "container" that derivatives trading venture Swapswire uses.

Although FIX can handle allocations – and American Century and Merrill Lynch conduct allocations via FIX – it is not going to make Oasys obsolete anytime soon. And anything further into the second half of the trade life cycle is out of FPL’s depth, as far as Atwell is concerned.

"You know when you overstep your level of expertise. It’s hard to find someone who knows both the front and back office well," he said.

Vendors are mixed as to the effectiveness of the latest FIX version.

George Kledaras, chairman and chief executive of Javelin Technologies, has high praise for the work that has been done on the session layer, which keeps the inter-action running underneath the business applications.

"The FIX session layer has been tightened," he said. "It’s been cleaned up and has support for FIXML. That’s always great because the session layer allows you the basis of the communication. It makes trading a lot safer and less likely to be interrupted. That’s what you want to see."

Sam Johnson, president and chief executive officer of Transacttools, which makes OpenFIX, software that tests connectivity at the session layer, has mixed feelings. While he is happy about the improvements to the session layer, he said more work could have been done on FIXML. "FIXML was announced with a lot of fanfare. It was supposed to be different to old-school FIX messages, but we’d like to have seen more effort put into that migration, and it didn’t happen."

FIX is a messaging specification developed for the real-time electronic exchange of securities transactions.