Banks push FIX for fixed income trading

The world's biggest sell-side banks have formed a working group to push the adoption of FIX connectivity for fixed income trading.

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Banks push FIX for fixed income trading

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Regulatory changes on both sides of the Atlantic - Dodd-Frank in the US and MiFID II in Europe - are expected to push far more fixed income trading onto public, electronic trading platforms.

With a plethora of new fixed income trading venues on the horizon, banks want to work with the ECNs and exchanges to ensure the use of FIX and other industry standards and are already working on the development of a specification and domain model that will form the basis of an open industry standard.

They argue that moving to FIX (and FpML) will keep down technology costs, enable faster and easier connectivity integration between market players, let firms tap and re-use IT infrastructure across multiple asset classes and provide greater vendor choice and technical flexibility.

Although the members concede that migrating existing infrastructure is a major exercise, they think that the technical and commercial benefits of a move to FIX make it worthwhile.

The working group - which counts BofA Merrill Lynch, Barclays Capital, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan Chase, Morgan Stanley, RBS, Société Générale and UBS among its members - has now begun talking with software vendors, ECNs and exchanges in a bid to get them on-board.

The group - which also includes consultancy ETrading Software and Expand Research - has also been in discussions with the industry standards body FIX Protocol Ltd.

Initially, they will focus on getting agreement on standardised connectivity in the interest rate swap and credit default swap space, centring on connectivity to trading venues resulting from the Dodd-Frank legislation.

Stephane Malrait, global head, e-commerce fixed income and currencies, Société Générale Corporate & Investment Banking, says: "The FIX protocol is widely adopted and successful in other asset classes. The timing is right for the fixed income community to look at possible synergies and take the lead to adopt such open protocols. The impact of new regulations will be an increasing number of trading venues that require to quickly and cost efficiently integrate with all market participants"

Sassan Danesh, MD, Etrading Software, adds: "This initiative will dramatically lower the effort to build and deploy custom connectivity solutions from sell-side institutions to trading venues. It also provides a strong opportunity for new and existing solution providers in the fixed income connectivity market to provide innovative new solutions to the community by leveraging open industry standards."

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