While the FIX protocol has become the de facto front office messaging standard for sell-side firms operating in the US capital markets, buy-side penetration and take-up continues to lag, according to a market survey conducted by TowerGroup and FIX Protocol Ltd (FPL).
FPL and TowerGroup surveyed 138 business and IT executives of North American banks, brokerages, asset managers and technology software and networking vendors in developing the 'FIX Americas 2003 Survey'. In total, 97% of sell-side respondents reported FIX usage, against buy-side utilisation of just 77%.
Rich Ronan, senior vice president of the global investment management technology group at Alliance Capital Management and FIX committee member, agrees: "Opportunity for increased penetration exists on the buy-side."
Findings indicate that by addressing differences in the interpretation of FIX and by expanding functional coverage, additional buy-side firms would consider implementation. In many cases, the sell-side is continuing to take the lead in extending the capabilities for FIX trading, and is waiting for implementation and usage by the buy-side.
"As the FIX Protocol continues to expand its product and functionality coverage towards its full potential, it becomes more important to maintain a consistent approach across all segments of the market," says Robert Hegarty, vice president of the securities & investments practice at TowerGroup. "The more in-sync the market is on developing FIX capabilities, the bigger impact it will have on trading decisions and technology investments."
Buy-side firms indicate that even after they have implemented FIX in their trading systems, it can still take an average of two to four weeks to wire up additional brokers. Despite this, the survey found buy-side respondents do take into account the FIX capabilities of their trading partners when doing business.