Electronic trading by banks and other financial institutions with counterparties has moved forward in leaps and bounds, but never really fulfilled the goal of optimal efficiency.
Transformation and upgrades are now commonplace in the electronic trading arena, and as the SWIFTNet FIX service demonstrates, riding an evolving trend of centralized technology solutions.
SWIFTNet FIX, one of SWIFT's newest messaging services, carries Financial Information eXchange (FIX) messaging. FIX has a history that goes back 10 years, with the development of FIX initiated by industry participants driven by the business need to reduce costs, avoid errors and increase the efficiency of communication between the buy and sell side.
SWIFTNet FIX was created in response to the SWIFT community's desire to utilise their current connectivity and reuse it in the front office, and after the completion of the SWIFTNet rollout in 2004, all members are now able to access this.
As part of a global SWIFT initiative over 100 institutions throughout Asia have been sent the necessary software to access the SWIFTNet FIX service. SWIFTNet FIX counts numerous institutions in Japan, Hong Kong and Singapore as clients and in 2004, signed up Singapore's Government Investment Corporation (GIC).
However, the latest local client to implement SWIFT's FIX session is one of the more conspicuous names in global finance, ING Investment Management Asia-Pacific, which is currently in the final stages of implementation.
"ING understand the vision of SWIFTNet FIX and one of the reasons they have adopted it is because they needed a service with a low maintenance set-up, but with a high level of support," says Chris Jenkins, regional manager Asia, business development, SWIFTNet FIX. "The implementation has been relatively smooth since beginning in August and they are now fully certified and preparing to go-live."
The SWIFTNet FIX service uses the hub and spoke model, meaning there is only one central session to be monitored that connects the buy side to all their counterparties.
Aside from an increase in operational efficiency and the easier access to global trading partners, clients such as ING Investment Management are moving to SWIFTNet FIX to reduce costs. "SWIFT implemented a hub model with one FIX session and one connection to the hub featuring a certification testing service," continues Chris Jenkins. "This eliminates the difficulties the buy side can have in connecting to multiple brokers all with different interpretations of the FIX protocol. The certification process takes away the pain of re-testing with every counterparty. This is of particular interest to the Asian FIX community where the IT resources may not be as great."
Numerous brokers in the region who have also signed up to SWIFTNet FIX in 2005 include UBS, Macquarie and Deutsche Securities. "UBS sees the great potential of SWIFTNet FIX in connecting our buy side clients in Asia, making the most of the certification and support, whilst using their existing SWIFT infrastructure," says Owen Tomlin, director of electronic execution at UBS Securities Asia.
Other brokerage houses that are now trading live on the network in Asia include CLSA, ABN AMRO and Nomura. The advantages of SWIFTNet FIX won't stop there either. SWIFT is working with FIX Protocol Limited to achieve interoperability of FIX and ISO messaging standards covering the lifecycle of the trade, something that will benefit the entire financial community.
