May 9, 2006 – One of the goals of FIX Protocol Ltd (FPL) for 2006 is to focus on the needs and adoption of FIX by exchanges and other liquidity markets. As noted in the 2005 FIX Global Survey, over three quarters of the exchanges surveyed support a FIX interface and the majority handle over 25% of their total trading volume via FIX. In 2006, there has already been an increase in exchange participation within FPL activities and their usage of the FIX Protocol.
At this time, FPL is pleased to announce the reformation of its Exchanges/ECN Working Group. This working group will be lead by representatives from three geographic regions – Matt Simpson of the Chicago Mercantile Exchange (Americas region), Kathleen Grey of HSBC (Asia Pacific/Japan region) and Hanno Klein of Deutsche Börse (EMEA region). In reestablishing its Exchanges/ECN Working Group, FPL will gather global and multi-asset class exchanges and market centers together to broaden FIX adoption, focusing on implementation success, challenges and opportunities. A number of smaller subgroups will be established within the working group to focus on specific initiatives. Broadly, the subgroups will focus on business practices, education and marketing and technical initiatives.
One such business practice-focused initiative will be related to the recent announcement by OMX and Deutsche Börse for a ‘Harmonised Exchange Standard’ using FIX. In that announcement, they stated, “FIX has the potential of becoming a common standard across exchanges and we invite other market operators to contribute to the initiative.” OMX and Deutsche Börse envision the FPL Exchanges/ECN working group as the vehicle to involve other global exchanges, their participants and further interested parties with a view of moving the implementation of FIX for access to exchanges forward. Hanno Klein stated, “FIX has reached the point of maturity where it provides good coverage for a wide range of exchange services, especially in the areas of core trading and market data distribution. Harmonised usage of FIX across exchanges will be key to realise the benefits of standard access that exchange participants have been asking for.”
The education and marketing subgroup will capture and document FIX usage by exchanges throughout the world, market success stories, provide education and encourage marketplace adoption. “There are three key challenges facing exchanges today: consolidation of exchanges, reducing the 'total cost of trade', and greater participation by ‘foreign’ investors as a result of market deregulation,” said HSBC’s Kathleen Grey.
“These issues result in greater demands for direct market access, greater product diversification from exchanges and cutting the cost of market transactions,” she said. “The education and marketing subgroup aims to understand the exchange perspective on the current electronic trading environment and inform market participants how the FIX Protocol deals with these issues.”
Another area of focus will review the technical requirements that appear to be unmet from an exchange’s perspective. These efforts will seek to identify gaps and recommend appropriate solutions to support a universal set of messaging requirements and needs. Matt Simpson stated, “Exchanges play a critical role in creating efficiencies across the industry both in terms of cost and technology. FIX provides an excellent basis from which to achieve these goals, on the condition that exchanges use FIX in a consistent manner and support a core set of functionality for market participants. The purpose of the group is to define this model in practical terms and ensure that it meets the needs of all exchanges and their users.”