Domestic bourses back global Fix standards, Citi first FII to join NSE

US banking major Citi has become the first broker on the National Stock Exchange (NSE) to introduce the global standard for electronic order messages, or Fix (Financial Information eXchange,) protocol. 

“Citi is proud to bring the next generation of messaging standard to India in collaboration with NSE,” said Kumar Goradia, head of India Equity Technology at Citi. 

“FIX capitalizes on Citi’s state-of-the-art technology and extensive global trading expertise. It is designed to improve the efficiency of India’s equity markets while bringing our global capabilities on a single platform,” Goradia added.

In response to NSE’s move, a Bombay Stock Exchange (BSE) official said they were already compliant with the advanced Fix 5. The move is likely to ensure higher transaction flows and increased turnover on domestic stock exchanges. Fix will help NSE upgrade its capacity to handle growing orders stemming from technology-driven practices, such as algorithmic trading. 

Fix is a series of messaging specifications for electronic communication of trade-related messages. It has been developed by banks, broker-dealers, exchanges, industry utilities and associations, institutional investors, and information technology providers from around the world. 

These market participants share a vision of a common, global language for automated trading of financial instruments. FIX is open and free, but it is not a software. Rather, FIX is a specification around which software developers can create commercial or open-source software, as they see fit. 

The use of proprietary codes had made it more difficult for global brokers and fund managers to trade with India, as they had to first convert their order messages to the local protocol. 

Market players say over 75 per cent of buy-side and 80 per cent of sell-side firms currently use FIX for electronic trading, and its usage could rise over 95 per cent over the next few years. Over three quarter of exchanges around the world use Fix and over 25 per cent of volumes are a result of this application. Both BSE and NSE have been focusing more on developing algo trading as it has caught the fancy of traders around the world. According to rough estimates by market players, 15-20 per cent equity derivatives trades in India are done through algo trading.