FIX Trading Protocol started as a revolutionary concept and is now playing a major role in the electronic processes used within the trading environment.
It reduces costs and creates increased levels of trust for trading around the world.
When Was FIX Protocol Created?
Development started in 1992 by Robert Lamoureux and Chris Morstatt.
They created FIX Protocol to introduce electronic communication of equity data between Fidelity Investments and Salomon Brothers.
The former is one of the largest asset managers in the world, and the latter were Wall Street’s most profitable firm during both the 1980s and 1990s.
Originally known as the ‘Salomon Brothers’ exchange, this was later changed to the broader term we know today as ‘Financial Information Exchange Protocol’.
The first public version became available in 1995, known as FIX 2.7. By the year 1998, electronic trading had become well-established, adopting robust functionality, which oversaw a steady decline in trader input.
During the 1990s, FIX Protocol began supporting STP (Straight-Through Processing), which is focussed on the post-trading space, and how this can be processed without manual intervention.
FIX Protocol also introduced the concept of IOI (Indication of Interest). This signifies a buyer’s non-binary intent for a security acquisition within the stock market.
If they’re deployed, an IOI will be used during the initial public offering and before block trades are placed by an institution.
Why is FIX Protocol Used?
Electronic communication reduces the issues from verbal communication, such as information being directed to the wrong brokers, or losing information all together.
Using machine-readable data, information is digitally consolidated, supporting easier sharing and analysis from traders.
Information can also be stored without losing its semantic meaning, doing so without human intervention.
What are FIX Trading Standards?
Four key principles have been established to maintain clear trading standards.
- Open standards must be created and maintained across the whole ecosystem. This applies from pre-trade to market data and settlement.
- Creating a transparent community for global trading.
- Improvements are encouraged for the trading process front to back for the global services industry.
- Members are given the opportunity to collaborate, learn and support each other through critical forums.
Corporate Governance For FIX Trading
FIX trading is a non-proprietary, free protocol, and collaborative industry efforts are constantly made to ensure this remains the case.
To uphold this status, the FIX protocol is managed under “Purpose Trust'', which was conceived to promote protocol adoption without the risk of undue exposure.
What is FIX FAST?
FIX FAST stands for Fix Adapted for Streaming. It is a technology developed by FIX protocol, with focus on data encoding/decoding techniques for optimal use of available bandwidth.
It’s typically used to transport high-volume market data feeds and ultra-low latency applications.
What is SBE?
SBE (Simple Binary Encoding), is an alternative data encoding/decoding method the has largely superseded FAST.
Both FIX FAST and SBE are generally used to encode/decode FIX application. Level messages.
What are FIXT and FIXP?
From the FIX 5.0 standard the session level was separated from the application level messaging. FIXT (FIX Transport Session Protocol) delivers data whilst the application level for business-related data content is being defined, and FIXP (FIX Performance Session Layer), establishes a reliable communication session between two end-points.
