FICWG group of leading sell-side banks announces industry support for the use of the FIX Protocol for cash bond trading

1 May 2013

Initiative led by 12 investment and commercial banks has gathered the support of many of the leading bond electronic trading venues

The Fixed Income Connectivity Working Group of leading sell side banks (FICWG) welcomes the positive response shown by the industry for the adoption of open, standardized protocols for the trading of fixed income cash bonds.

Launched by the global investment banking community in June 2011 and supported by Etrading Software Limited (“Etrading Software”) and Expand Research LLP (“Expand”), FICWG aims to promote the global use of the FIX Protocol and other industry standards across all fixed income products. Since launch, FICWG has worked in collaboration with the FIX Protocol Ltd (FPL), to create best practices recommendations for trading fixed income instruments via the FIX Protocol.

Work on defining the first version of the best practices for trading bonds commenced in March 2012 and was formally published by the FIX Protocol standards body in February 2013. Since then, many of the leading electronic bond venues have moved to adopt the open FIX Protocol and the associated best practices for the electronic trading of government bonds (e.g. US Treasuries, Euro-zone government bonds, Gilts, JGBs) as well as the major credit instruments (e.g. Sovereigns, Supras, Corporates, High Yield and Emerging Markets).

The list of adopters includes BGC Partners, BondDesk, Bonds.com, ICE/Creditex, Dealerweb, Deutsche Börse Group, GovEx, GFI, London Stock Exchange, MarketAxess, MTS, SIX Swiss Exchange, Thomson Reuters, Tradeweb and Tullett Prebon.

The benefits of industry-wide adoption of common technical standards include:

1. Increased transparency through faster and easier integration between market participants

2. Increased efficiency through lower cost of ownership of the technology required for trading and connectivity

“We are very supportive of the best practice recommendations and the adoption of standardised protocols for the trading of fixed income instruments as this will improve significantly the integration of our technology and thereby help reduce the cost of implementation for our Credit & Rates businesses.”, Pierre Moret, Head of Fixed Income Front Office IT, Lloyds Bank Commercial Banking.

"Deutsche Börse Group fully supports the work of the Fixed Income Connectivity Working Group to promote common standards for trading cash bonds via the FIX Protocol. As more fixed income OTC products trade electronically, the adoption of a standardised protocol helps increase market transparency while also significantly reducing connectivity costs for the market participants.", a Deutsche Börse spokesperson.

“FICWG is a prime example of banks and trading venues working together to address the technical challenges created by the changing market structure in fixed income. The adoption of the standards, which are based on the FIX Protocol, will provide the necessary technical foundations to enable the continued rapid growth of bond electronic trading in the new world of reduced and fragmented liquidity.” Sassan Danesh, Managing Partner, Etrading Software.

“This is an incredibly important milestone in the evolution of electronic Fixed Income trading, following on from the successful implementation of the FIX Protocol in Derivatives”, says Rupert Bull, a Partner at Expand Research, a company of the Boston Consulting Group. “The adoption of the protocol by so many of the world’s leading cash bond trading platforms is validation of the vision for standardisation. It represents significant progress towards the financial and operational benefits for all market participants.”

Additionally, FICWG will continue to work closely with industry stakeholders to identify any additional functionality needed to ensure FIX effectively meets the evolving business needs of the fixed income markets and if required, enhancements will also be made available for industry adoption.

About the FICWG members

The members are a group of global broker-dealers who are committed to the promotion of open standards for the trading of fixed income products. They collectively represent a large proportion of the global fixed income OTC market and include BofA Merrill Lynch, Barclays, BNP Paribas, Commerzbank, Goldman Sachs, HSBC, J.P. Morgan, Lloyds Bank Commercial Banking, Morgan Stanley, Nomura, RBS and UBS.

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