FIX Protocol Limited

1
FIX Protocol Limited
???????????????

• Japan Securities Dealers Association
• Peter C Randall
• Executive Director

2
FIX the purpose

• To improve the global trading process
  
• by defining, managing, and promoting
  an open protocol for
  real-time, electronic communication between
  industry participants, while complementing
  industry standards.

3
FIX the last 10 years

• Salomon Fidelity conversations
• Competing models, open or closed?
• Generic or Customised?
• Broader industry background
• Growth of quantitative management style
• Increasing product sophistication

4
to improve the global trading process

• nearly 60 of respondents reported that they were
  making use of FIX within their organisation in
  some capacity
• a further 27 reported that they are planning to
  implement FIX in some form within the next 12
  months
• amount of order-flow sent using FIX continues to
  grow. 90 of respondents that undertook equity
  business used FIX.
• sizeable 21 of firms in the equity space
  indicated that all of their equity activity was
  conducted over FIX
• US buyside 77 are FIX users, US sellside 97
  are FIX users
• Nearly 50 of buyside firms expect more than half
  of their flow to go via FIX in 2004/5
• during the past 10 years volumes, values and
  complexity have increased dramatically, in part
  this has been enabled by FIX

5
defining, managing promoting

• FIX Protocol is defined by the Global Technical
  Committee, which consists of buyside, sellside
  and vendor representatives
• Critically it is an industry led and enabled self
  specification group that deal with actual
  business rules, real-time communications and live
  trades.
• Growth of various releases from v3.0 thru v4.4
  and beyond, adding functionality, breadth and
  depth. v4.4 is now the version of choice.
• Managing the standards initiatives and the IP
  issues that are inevitable with an open
  standard
• Promoting the use, implementation and advantages
  of the protocol, from cost savings to automation
  to ease of connectivity to growing business flows

6
an open protocol

• Open in the sense that the specification is
  published on the website and is available for
  free to developers
• Open in the sense that industry participants are
  encouraged throughout the life cycle of a version
  to help develop, improve and contribute to the
  protocol and its acceptance
• Open in the sense that the protocol is both
  platform and operating system independent,
  neither is it tied to an individual market or a
  specific set of business rules
• Open in the sense that additions and extensions
  are constantly being developed, worked on, tested
  and when ready are made available within the
  aegis of FIX Protocol Limited
• Open in the sense that the ultimate IP is both
  mutually controlled and mutually owned

7
real time electroniccommunication between
industry participants

• Between 1990 and 2000 European trading volume
  increased at an annual compound rate of 30
• At the same time electronic trading of shares
  including direct market access have seen
  significant commission reductions
• In the US since 2000, buyside trading has
  increased by 18 but now nearly 40 of all US
  trades are done by non traditional managers and
  their volumes have increased by a cagr of 80
• The benefits of FIX are commonly cited to be a
  reduction in operational errors, an encouragement
  of alternative trading venues, and more active
  buyside order management participation
• 93 of buyside houses report that they are more
  likely to want to pass an order to a FIX enabled
  house

8
complementing industry standards

• FIX is de facto the industry standard for IOI,
  pretrade, and trading activity. It is being
  developed by its users into the post trade and
  allocations space
• FIX is not just equities, it is also very active
  in the Fixed Income and Derivatives space
• FIX is close to operating a certification plan
  for certain FI applications with important
  ramifications for equities derivatives
• FIX has a memorandum of understanding with SWIFT
  to move toward convergence with the ISO 15022
  standard and is a very active participant of WG10
• FIX sees interoperability as an immediate and
  attainable goal and is working hard with related
  standards bodies to achieve this