November 30, 2005 – FIX Protocol Ltd. (FPL) released the following position statement regarding international standardisation efforts and the disposition of its 2001 Memorandum of Understanding (MOU) with SWIFT. In addition, FPL has produced a FAQ (Frequently Asked Questions) document to provide additional details.
FIX Protocol Ltd. entered into a memorandum of understanding with SWIFT Standards on 5-Jul, 2001 to participate in the ISO 15022 XML WG10 effort. FPL worked with SWIFT completing that work by reverse engineering a subset of FIX 4.3 in 2003. The result of this work is in the process of being ratified at this time. FPL considers it important to recognise that there have been significant changes in both the industry and the standard’s space since 2001. FPL believes that the best measure of the acceptance of a standard is its adoption. FPL does not believe this ISO 20022 Securities Pre-Trade and Trade work, even when ratified, will be widely adopted by the asset management and brokerage communities. Given these circumstances, FPL determined in April 2005 that it would be best to formally bring to an end its MOU arrangement with SWIFT Standards. This was conveyed to the relevant parties at that time.
FPL is a Liaison A organisation to ISO TC68/SC4 and plans to continue to be represented on the ISO 20022 RMG (Registration Management Group) and to stay abreast of various ISO initiatives. An example of this is the recent participation by FPL in enhancing the ISO 10962 Classification of Financial Instruments (CFI Codes) standard to support currency derivatives. FPL has been asked by ISO to participate more actively in the Securities SEG (Standards Evaluation Group) and to endorse and promote the Securities Pre-Trade and Trade work done as part of WG10 and the current ISO 20022 efforts. However, at present FPL believes that this new set of messages is redundant and perceives little demand for this from the financial industry.
FIX is the de facto industry standard for pre-trade and trade, and is gaining rapid adoption for post-trade communication, particularly for listed derivatives. As such, FPL believes that the FIX Protocol should serve as the basis for future international standardisation. It is important for the FIX community and the financial industry that clarity and certainty be provided to those FIX users who have invested significantly in the FIX Protocol. FPL continues to evolve FIX for multiple asset classes, including equities, fixed income, foreign exchange, and listed derivatives. Enhancements to FIX are driven by market participants who expand the scope of its open standard where there are gaps and where other industry adopted solutions do not yet exist.
FPL participates with other standards efforts to enhance STP and improve integration at the boundary points between FIX and other business processes, such as SWIFT messages used for settlement. FPL remains committed to industry cooperation via its relationships with the BMA (Bond Market Association), FIA (Futures Industry Association), ICMA (International Capital Markets Association), ISDA/FpML (International Swaps and Derivatives Association/Financial Products Markup Language), MiFID Joint Working Group (Markets in Financial Instruments Directive), TWIST (Transaction Workflow Innovation Standards Team), and others.
Adoption of the FIX Protocol should be considered a strategic long term direction for the financial industry.