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Much of the capital markets’ critical trade functions pass through FIX systems. A FIX connectivity issue or outage can lead to a breakdown in communication between broker and client, which can bring significant financial and reputational ramifications for the firms involved.

Monitoring the health and performance of FIX connections using a robust FIX monitoring framework allows firms to pre-empt problems and maximise uptime. In this article, GreySpark Partners, in partnership with ITRS, discusses the importance of financial firms having robust FIX monitoring frameworks in place and explores the key role of FIX in helping financial firms achieve operational excellence.

In 1992, the Solomon Brothers and Fidelity Investments introduced the financial market’s first universal translator – the Financial Information eXchange (FIX) protocol. Until then, the communications and processes for the trading of securities utilised telephones and spreadsheets. Although this person-to-person trading methodology was perfect for nuanced negotiations and relationship building between the buyside and sellside, the manual data handling and recordkeeping sometimes led to indications of interest being lost or routed to the wrong trader. This ultimately reduced trust in the trading system. Even after computer networks for trading had proliferated across the globe, the lack of a standardised data exchange framework had led to networks and servers being unable to process data from different sources. The FIX protocol became a powerful tool to help overcome these challenges.

FIX is an electronic pre-trade, at-trade and post-trade communications protocol for the real-time exchange of securities transaction data. FIX has, arguably, evolved into the leading industry protocol for trade communications, allowing for efficiency, visibility and trade simplicity in a standardised framework.  The evolution of the FIX protocol continues to be industry driven and is managed by an independent body called FIX Trading Community. This organisation has a membership of over 270 firms from across the global financial services industry.

FIX messages play an inconspicuous, yet fundamental role in the flow of trade information between financial service organisations and are used across all asset classes. They are a vital bridge between buyside and sellside customers; it is no exaggeration to say that without them trade communications between a wide range of counterparties would be impossible. Today, the FIX protocol messaging is used across the full trade lifecycle, supplying critical information about securities trades between parties such as timings, execution quality and order composition.

Ultimately, FIX has become an integral part of capital markets firms’ technology stacks due to its ability to help facilitate fast-moving markets. The use of a standardised, automated protocol has bolstered trade speed and reduced reliance on human intervention. FIX has also lowered trading costs as best execution is more easily achieved by enabling sellside and buyside firms access to a wider range of counterparties. FIX provides a high degree of transparency, too, as it creates an easily accessible audit trail that is comprehensible to regulators should they want to review the data.

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