Frequently Asked Questions About FIX
1. How will increased use of FIX improve access to liquidity for market participants?
Sellers want to obtain the best available price for a security in the shortest possible time. By enabling the electronic exchange of trade-related information, FIX® compresses the time needed for price discovery and to transact. It is a free and open standard, which has become the language of the global trading community.
2. How will use of FIX aid price discovery and promote price improvement?
FIX makes it fast and easy to discover market depth across as many prospective trade counterparties as you wish. You can contact multiple counterparties – investors, dealers, alternative trading systems – with a single message, requesting or showing bids and offers as you please. Reach more people in less time, while reducing your dependency on proprietary solutions.
3. I am a portfolio manager. How does FIX help me?
First, you will use FIX to power your analytics with relevant, real-time data. Then, whether you are looking to lock in an attractive spread between two securities or to re-balance your portfolio across multiple positions, the speed of price discovery and trading that FIX affords works to ensure that your investment in analytics and time spent working up trade scenarios is rewarded with realisable trades.
4. I am a salesman. How does FIX help me?
Time is your most precious resource. FIX enables you and your support team to spend more time on high-value activities and less on error-prone, mechanical processes.
5. Will greater connectivity among market participants disintermediate broker-dealers?
In and of itself, connectivity is not a disintermediator. While greater connectivity may mean a more competitive environment for broker-dealers, it also provides them with new ways of satisfying customers and differentiating their services.
6. Who could I communicate with via FIX?
Hundreds of firms are already FIX-enabled and ready to communicate with you via FIX. This includes virtually all of the primary dealers and major alternative trading systems, as well as many of the largest fund complexes and money-management firms.
7. What do I need in order to “talk” FIX with my trading partners?
Communicating via FIX is easy and cost-effective. You will need a FIX engine or service capable of sending, receiving, and interpreting FIX messages. You can build or buy your own engine, subscribe to a FIX network or message hub, or may even have trading partners who will provide “free” FIX connectivity as a value-added service. Specifications are readily accessible through this website.
8. What will be the cost of modifying my infrastructure to enable FIX communications, and what are the incremental support costs?
This depends on factors such as (i) whether you presently have any FIX capabilities at all, (ii) already use FIX for stock trading, (iii) wish to have a unified FIX capability for multiple asset classes or else to have separate FIX capabilities for each asset class, (iv) prefer to build or buy your own FIX engine, or (v) choose to subscribe to a FIX network or message hub.
The price often depends on architecture and design requirements. Your preferences with respect to front-end applications will also affect costs. If you do not already have an order management system (“OMS”), for example, you may wish to buy or build one. Alternatively, several vendors provide inexpensive solutions for FIX-enabling your Excel spreadsheets.
9. Doesn’t FIX imply multiple, point-to-point circuits? Isn’t that expensive?
FIX works across existing networks as well as newer connectivity methods. It is a language, not a transport mechanism, so does not in and of itself increase your network/connectivity costs.
You do, of course, need connectivity in order to use FIX. Traditionally, market participants have deployed dedicated circuits for message transport, and FIX is fully compatible with that approach.
10. Do I need a VPN for FIX communications?
A virtual private network (“VPN”) is merely one transport alternative for your FIX communications, to be used only if that best suits your needs. Many firms will find a VPN to be the most convenient and economical method of connecting with other FIX-enabled firms. You may prefer one or more dedicated connections or a combination of the VPN and dedicated circuits.