As connectivity gets more complex, new approaches are needed
The electronic trading landscape has undergone rapid transformation in recent years. As communication technology binds buy-side and sell-side trading desks, the need for efficient and flexible connectivity solutions has become paramount. In this blog post, we delve into the evolution of FIX connectivity, and introduce ION’s new approach in this crucial area.
Increasing complexity
Traditionally, adding new connections to a FIX network has been an implementation task. Engineers meticulously configured both ends of the connection, allowing parties to communicate over the FIX protocol. However, in recent years several different factors have made FIX connectivity significantly more complex, and the labor-intensive process of manual configuration is increasingly unsustainable.
Buy-sides have increasingly demanding requirements. Firms are seeking access to markets across the globe and a wider range of asset classes. Clients are now looking for liquidity across exchanges, dark pools, and alternative trading venues to achieve their execution goals. The growth of algorithmic trading also makes order flow and messaging requirements more complex; for example, low-latency or pre-trade risk controls. Algo wheels, which dynamically assign orders to different algorithms based on pre-set conditions, also add complexity.
This increasingly complex landscape demands agility and adaptability from sell-side firms. Without a flexible automated solution for enabling client connectivity, sell-sides will struggle to maintain a competitive offering.
The need for agility
Being able to seamlessly add new connections in the context of electronic trading and FIX networks offers several advantages:
- As trading volumes increase, firms need to connect to more counterparties, exchanges, and liquidity pools. Seamlessly adding new connections allows firms to scale their trading operations.
- The financial landscape is dynamic, with new trading venues emerging and existing ones evolving. Buy-sides are increasingly seeking access to more global markets and a wider range of asset classes. Sell-side firms must adapt quickly to client demands and to changes in market structure, regulations, and technology.
- Traditional manual configuration of FIX connections is time-consuming. A seamless approach reduces implementation time, allowing traders to focus on strategy development and execution.
- When onboarding new clients or counterparties, quick connection setup is crucial. Seamless connections streamline the process, enhancing client satisfaction and business relationships.
- Manual configuration involves engineering effort and maintenance costs. Simplified connection management reduces operational overhead.
For sell-sides, an agile approach to FIX connectivity enhances flexibility, responsiveness, and efficiency in electronic trading. This benefits both market participants and end-users. But it’s also crucial to be able to understand in detail how each connection is used to assess the return on investment.
Fidessa FIX Connect
Fidessa FIX Connect is ION’s new solution to the challenges of FIX connectivity. Using a new architectural approach, it delivers a faster and more responsive experience.
- Connection definitions are stored in data, creating a directory of possible endpoints.
- This data is distributed to every node in the ION FIX network.
- Each endpoint becomes aware of all other possible endpoint locations for sending FIX messages.
- Clients can now describe their required connections without extensive platform configuration changes.
The benefits of this approach are:
- Scalability: Adding new connections becomes quick and straightforward.
- Flexibility: Connections can be easily tailored to specific needs.
- Efficiency: Endpoints dynamically adapt to network changes.
A new and intuitive web UI also makes it easy for users to activate and manage connections, making the whole process of onboarding customers and enabling new connections as seamless as possible.
We’re beginning the process of rolling out FIX Connect this year, and we’re continually investing in the service to deliver additional features and functionality. If you’d like to find out more, please get in touch.
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