Mostly… fixed income and cross product eTrading

December 12, 2007

FIX Protocol Limited

Filed under: etrading, FIX — holky @ 4:21 pm

You could interpret the message from FPL about state of the nation (well, state of the globe really) re FIX as being great; FIX sorts out all of the etrading problems. FIX can cope with etrading in any asset classes anyone could ever dream of. FIX handles market data (whether requiring FAST or not). There are graphs to point at showing lots more people using it year on year. Everything’s rosy. If you are buyside and it’s not in your plans, now, then you’re clearly going to be at competetive disadvantage.

While I still think FIX is the eventual tech answer, I also think sellside have always taken all of the talking heads and blurb propoganda with a pinch of salt. And I’ll pose here the question now whether buyside do the same. (This question hasnt come from nowhere – rather crystalised by a conversation earlier today).

Sellside have invested in supporting FIX for (whatever product, type, class, ??) to satisfy  the marketing benefit or on occasion the flow with particular customer(s).  Over and above that sellside have invested in supporting FIX for the products that it is in use for (generally) exchange traded products, and in that space generally equity. Are they building a long term foundation in sticking this in for other product classes or venues – yes maybe so.  Are they believing the hype that everyone’s doing it right here right now … well, where’s that pinch of salt?

So on the buyside; start with the question of how many buyside clients are connected to sellside above FIX 4.2 … albeit with some agreed custom extensions that may or may not be 4.3+ or 5.0 compliant?    If the FPL talking heads are bigging-up FIX saying it handles all asset classes and types of flow and whatever, do buyside (quietly from a position of mild embarassment) discount this because they know they have fundamental tech problems to sort out first; problems regarding inhouse pricing and trading infrastructuure before they can even start to think about how this all interfaces with the outside world?  Problems where years of (relative) under-investment (in the big scheme of things) means the spend now needs to go there first; before the outside world connectivity comes into play.

Rather than focussing on what the latest version of FIX (feasibly) brings, wouldn’t FPL get more buyside uptake by delivering speeches and generic roadmaps that help go from a crap infrastructure position now to the wonderful world of full connectivity and everything that moves [via FIX].  If buyside can discount a presentation because they ‘feel’ they are behind the curve in terms of general oms/ems infrastructure, because the message is so just plug it in and alls well, and this stops them actively proceeding on as FIX implementation for their etrading; then that ~ 18 month lag for critical mass to connect via FIX is going to continue to roll at a constant 2 years…. because there is no-one “selling” a true solution – other than the OMS (EMS) guys (such as CRD) who pitch their solution as plug and play, and i dare say hit the problem of integrating with something (that is likely antiquated, fragile, and with a tonne of workarounds to automate the workflow).

One of the biggest problems doing this etrading thing at sellside was always that scaling the front end customers or number of trades they could stick through meant any operational workaround was highlighted – because it didnt scale without more people typing. So shouldnt FPL and the vendors hoping to carve a slice of pie be pitching themselves as sorting out the operational mess that the world is in, rather than claiming connectivity to new markets is their way forward at this point?  If its the case that you get the buyside genuinely on board and the world is your lobster, then why keep banging on about new markets and wonderful new stuff; when surely a ‘we can help you from where you genuinely are now into a better future’ is the way to go?

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