NEW VERSION OF FIX PROTOCOL MAY SAVE THE SECURITIES INDUSTRY $100M ANNUALLY

The latest version of the FIX Protocol could lead to industry savings in excess of $100m annually on confirmation processing alone, according to new research commissioned from CityIQ by Solution Forge.

Already considered the de-facto industry standard for pre-trade processing between fund managers and brokers, the protocol has been significantly enhanced to cover post trade processing in version 4.4, released in April 2003.
The research has identified that the new facilities will enable many firms to switch their processing from utility providers such as Omgeo, with savings at average firms likely to be in the region of $125,000 annually, with larger firms able to realise considerably greater savings.

John Wilson, the CityIQ Director who led the research effort observed that "While services from firms such as Omgeo undoubtedly have additional features over FIX, with most firms already looking to reduce costs, they may be prepared to forego these." John added "The savings we’ve highlighted actually understate the benefits that will accrue from introducing the protocol into the pre-trade and allocations processes for those firms that remain manually based – which can be done at minimal extra cost."

"The conclusions of this research appear to meet the criteria of being low risk and low cost, with the immediate gratification that most firms are demanding from projects. Whilst there will be work involved for firms that are not already FIX enabled, the payback period is likely to be less than 6 months".
Commenting on the findings, Kevin Lee at Solution Forge said "We were staggered by the enormity of the savings available from switching from existing post execution services to FIX and the ease with which these savings can be achieved. Whilst this conversion won’t happen overnight, there could easily be a material switch in the next 15 months"

Buy side and sell side firms can assess their own potential savings, courtesy of a calculator that CityIQ have made available on their web site.
SWIFT are also planning to host a free seminar for buy side firms to discuss these findings in early June in their London offices, which can be booked on the CityIQ website. The FSA approval of FIX confirmations is expected shortly.

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