AxeTrading at the FIX EMEA Trading Conference #FIXEMEA2020
Our Co-founder and CCO, Mark Watters, is introducing the 'Technology and Automation' in Fixed Income panel at 14:15 BST.
For those not able to join the live panel here is a recording:
A FLEXIBLE FUTURE FOR FIX?
It’s widely recognised that FIX has achieved the objective of providing a global standard and normalising machine to machine communication for trading applications. The “syntax” of the FIX protocol is now nearly universally accepted and is well on the way to being the de facto standard that has progressed the industry away from the collection of proprietary APIs that were previously in use. The entire ecosystem of the new trading era has been enabled by FIX.
We have all seen how it adds value and removes layers of complexity whilst enhancing security and stability. It definitely enables FinTech vendors to provide new connectivity, workflows and accommodate new venues far quicker and more efficiently than the myriad landscape of different rules that legacy systems still inhabit. FIX asynchronous messaging delivers convenience, stability and interoperability today but can it do more tomorrow?
The FIX standard is owned, maintained and developed through the collaborative efforts of FIX Trading Community member firms. So far, FIX has proven reassuringly politically and culturally adept at working with every type of regulatory and political governance globally. This is no small achievement as can be seen with the challenges faced by SWIFT and numerous general communications platforms having governments challenge or tamper with them in more or less overt ways. With over 300 members, the process of getting changes or additions has many pressures and could risk becoming less nimble, understandable considering the number of players combined with the risks and challenges, but it’s a situation that may benefit from consideration. The larger meeting and full committees format provides many of the benefits of democracy and openness but may have challenges in providing effective contributions. Whilst the protocol is inherently vendor-neutral, the direction of the FIX project is guided by the needs of the market and this requires careful stewardship. There is a skilful juggling required to balance the needs of the largest players, who have the widest reach, and the possible interests of other smaller market participants. Otherwise there may be a risk that innovation may not be as forthcoming. FIX are working hard to balance these competing needs whilst ensuring progress is maintained.
What is the future for FIX? There is no doubt it is an outstanding contribution to market technology and is growing in strength. FIX is ‘quick’ and has been able to adapt and be used for very low latency applications, and is showing strength to encompass more exotic use cases. Over the past couple of years consideration has been given to the hot topics of cybersecurity, digital currencies and blockchain in addition to the more mainstream issues of execution transparency and general performance improvements.
FIX are working hard to ensure that it does not become over engineered and risk being inflexible. There are challenges, in a ‘typical’ message most of the possible fields are never used but can’t be repurposed to deliver what the user may actually need to communicate. Encryption is an important feature of modern fin-tech but is it optimal for this information to be transmitted in the message, when in fact the ‘work’ is done at each end.
To thrive and grow FIX is looking at many options, possibly embracing more workflows and message types, not just ‘out of the box’ but to be more easily adapted to custom applications. We would also welcome the FIX Trading Communities drive to further education and publicise to ensure that all users of the protocol are aware of the many tools and techniques available to their users.
As more market data is being consolidated, normalised and shared in the market, FIX is looking at how to be able to adapt to new uses to maintain its now vital market role and remain fast and dynamic.