Support and version control key to FIX expansion

Support and version control key to FIX expansion

Buy-side and sell-side firms across the world plan to aggressively expand their usage of the FIX messaging protocol over the next 24 months, particularly across non-equity products such as fixed income, derivatives and foreign exchange, according to a survey conducted by TowerGroup for FIX Protocol Limited (FPL).

The survey found that over 80% of buyside firms and over 95% of sell-side firms currently or plan to support FIX allocations. In addition, over three quarters of the exchanges surveyed support a FIX interface and the majority handle over 25% of their total trading volume via the protocol.

While buy-side firms will be focusing on direct market access (DMA) via FIX, sell-side companies plan to expand their usage beyond DMA into algorithmic and program trading.

The study found that although a "large percentage" of buy-side firms plan to concentrate on version 4.4 over the next two years, multiple legacy versions of the protocol will remain in force. TowerGroup says the FPL needs to create incentives for firms to upgrade FIX versions, as many users don't feel the need to migrate while older versions remain supported.

"Clearly there is a need for 'sun-setting' of older versions to maintain the value of the investment by the community, manage the profound cost implications of multiple versions over time and to support the ongoing evolution of the standard," states the research house.

Looking ahead, the survey found that market data via FIX is perhaps the biggest opportunity and holds the most potential for the extension of FIX across the trading activity chain. Exchanges in particular were found to see potential product opportunities to utilise FIX as a cheaper and more efficient delivery mechanism for market data.

Commenting on the research, Brian Nathan, FPL member and director of advanced trading solutions, Macgregor, says: "The responses clearly demonstrate that FIX usage will continue to grow rapidly across asset classes, regions, and trading methods. This survey will serve as an initial benchmark for future surveys by providing a panoramic snapshot of global FIX usage."

Earlier this month FPL said it was pulling out of an agreement with Swift to establish the ISO 15022 XML format as a common messaging standard, in response to the continued growth in FIX uptake.

TowerGroup believes that if FPL is to achieve its goals it needs to "expand its infrastructure to provide the resources and support needed to focus FIX efforts across the global market".

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