Boosting the Resilience of Post-Trade with a Collaborative FIX

Early adopters of back office efficiency gain an edge, but the industry needs wholesale change through standardisation.

When financial services shifted to remote workingwhile also dealing with increased market volumes in response to the global impact of Covid-19, it put the spotlight on operational efficiency and the need for increased automation and standards. Outdated, manual processes based on creaking infrastructure are simply not sufficient when employees are working in isolation away from offices; and in post-trade, unnecessarily complex, siloed operations further complicate matters when working to maintain seamless operations during a crisis.

In the lead-up to the pandemic, Accenture reported that an average of 70% of banks’ IT budgets are still being spent on maintaining legacy environments. To be resilient when faced with disruptive events, the industry needs to move aggressively, rather than making incremental tweaks. Prioritizing resilience and driving efficiencies requires aggressive simplification of the post-trade industry. The adoption of technical and operational global standards is an accelerating trend whose time has come.

The Financial Information eXchange (FIX) protocol is an industry-led partnership with a business-driven approach to solving granular challenges in STP by developing new messaging standards. In the 2010s, FIX took on an ever-increasing role in front-office executions as electronification of trading came to all asset classes. There are also opportunities to extend FIX usage into the middle- and back-office. FIX has already seen positive post-trade adoption on both the buy side and sell side with FIX allocations and confirmations for equities and fixed income, and now there is increasing interest in the exchange-traded derivatives, foreign exchange and repos markets. More generally, the industry is showing more interest in moving FIX beyond the middle-office into the settlement and payments process, a necessary step toward 100% digital, automated straight-through-processing (STP). Read the full article click here