FIX it quick
10 June 2014
What’s next for technology, asks Rob Sammons of Anetics, Inc
Image: Shutterstock
Before internet browsing, arranging air travel was best handled by a local travel agent. He or she had access to all of the schedules and fares. With knowledge of the customer’s profile and preferences, this person could set an itinerary and deliver travel documents. When you think about it, travel agents were a bit like finders in the stock loan industry. In some regards, it’s a good thing times have changed.
I’m ever intrigued by how sophisticated booking air travel has become. It seems that you can go to any airline website and discover schedules, fares, and seat availability. Or you can go to an intermediary site to see the same information for many airlines all at once. Generally, the information available in both cases is the same.
I like arranging my own air travel, so that I can personally select the options that work best for me. I may go to one of the intermediaries to get the big picture, but I always book directly with the airline. I favour a bilateral contract with the service provider, and no intermediary. I find that it’s best to execute quickly once you find your deal. Hover too long, or make the same inquiry too many times, and you may see the fare increase.
With air travel, sets of XML messaging standards have evolved for open communication between the airlines and booking agencies that even today continue to coalesce as the industry strives for better integration and a common protocol. Some 20 years ago we, in the equities industry, had the same need for communication, and lucky for us the FIX messaging protocol emerged. I say lucky because it has generated almost universal adoption, is easy to work with, and is an open-standard, freely available to any participant that wishes to use it. FIX messaging has been so successful for equities that it is now also used with fixed-income, foreign exchange, and certain other products.
The interesting thing here is, so far as I know, Anetics may be the only technology firm that uses FIX for anything related to securities lending. And we use it not by having created custom message formats, but by using standard messages, having them represent borrow/loan, supply/demand, or locate put/hold, depending on the context. There are an adequate number of standard fields to define most any attribute of a deal.
The stock loan desk
A day in the life of a stock loan desker starts early and seems to be getting longer, as fewer people are tasked with more to do. There are platforms to manage, phones to answer, and the constant flow of email and Bloomberg messages that can’t be ignored. Many of these emails and messages, whether addressed manually one-by-one or collated by the Anetics Twill platform, offer a treasure trove of information about available securities, from or needed by the marketplace.
More dealing today is done through auto-borrow/auto-loan than ever before. This is often only beneficial if you are wired up to same hub as your counterpart. Even then it is usually just a fill-or-kill order request, perhaps with rate requirements. If a transaction is concluded you may even have to pay a fee, depending upon the hub you are on.
With email and telephone dealings you have unrestricted reach to and from all your counterparts with no supplemental transaction costs. This message flow is constant: everything from loan returns and requests for colour to pricing on new loans, with rate changes and myriad other tasks smattered in. Stock loan deskers take this all in stride, cutting and pasting, parsing and typing, in and out of whatever trading system he or she may be using, always striving to get back to the customer with a good answer or confirmation in a timely manner.
The future
Consider this: what if such flow of activity went directly from trading partner to trading partner, and not by email or voice over telephone, person to person, but as an electronic message, system to system? Most of the cutting and pasting, parsing and typing of lists is no longer necessary. The raw underlying data will have gone directly into the user’s stock loan system. In some instances, the work related to the message can be completed without dealer intervention. In cases where dealer action is required, it happens on-screen, with no manual transfer of data, one system to another.
The underlying FIX messaging protocol is all transparent to the desk user. Think of FIX as system-oriented email—electronic documents that allow any one system to talk to any other system, and receive responses with updates and changes. Negotiated dealing with counterparts becomes key-strokes and mouse-clicks. If a loan request is received by your system at a rate you don’t like, don’t just accept or decline it. Kick it back with a rate you do like, add a comment, and wait for your borrower to respond.
Lest this all seem like magic, because it isn’t. It’s already the practice in other industries and the FIX messaging protocol is the perfect enabler for securities lending. Anetics has been using FIX messaging in customer communication for years. It is just a matter of time before you will wish to wire it up to your desk.
We at Anetics would be curious to hear from any industry participant that is also using FIX and if there is interest in collaborating on FIX standards for securities lending. It’s just a matter of time.
I’m ever intrigued by how sophisticated booking air travel has become. It seems that you can go to any airline website and discover schedules, fares, and seat availability. Or you can go to an intermediary site to see the same information for many airlines all at once. Generally, the information available in both cases is the same.
I like arranging my own air travel, so that I can personally select the options that work best for me. I may go to one of the intermediaries to get the big picture, but I always book directly with the airline. I favour a bilateral contract with the service provider, and no intermediary. I find that it’s best to execute quickly once you find your deal. Hover too long, or make the same inquiry too many times, and you may see the fare increase.
With air travel, sets of XML messaging standards have evolved for open communication between the airlines and booking agencies that even today continue to coalesce as the industry strives for better integration and a common protocol. Some 20 years ago we, in the equities industry, had the same need for communication, and lucky for us the FIX messaging protocol emerged. I say lucky because it has generated almost universal adoption, is easy to work with, and is an open-standard, freely available to any participant that wishes to use it. FIX messaging has been so successful for equities that it is now also used with fixed-income, foreign exchange, and certain other products.
The interesting thing here is, so far as I know, Anetics may be the only technology firm that uses FIX for anything related to securities lending. And we use it not by having created custom message formats, but by using standard messages, having them represent borrow/loan, supply/demand, or locate put/hold, depending on the context. There are an adequate number of standard fields to define most any attribute of a deal.
The stock loan desk
A day in the life of a stock loan desker starts early and seems to be getting longer, as fewer people are tasked with more to do. There are platforms to manage, phones to answer, and the constant flow of email and Bloomberg messages that can’t be ignored. Many of these emails and messages, whether addressed manually one-by-one or collated by the Anetics Twill platform, offer a treasure trove of information about available securities, from or needed by the marketplace.
More dealing today is done through auto-borrow/auto-loan than ever before. This is often only beneficial if you are wired up to same hub as your counterpart. Even then it is usually just a fill-or-kill order request, perhaps with rate requirements. If a transaction is concluded you may even have to pay a fee, depending upon the hub you are on.
With email and telephone dealings you have unrestricted reach to and from all your counterparts with no supplemental transaction costs. This message flow is constant: everything from loan returns and requests for colour to pricing on new loans, with rate changes and myriad other tasks smattered in. Stock loan deskers take this all in stride, cutting and pasting, parsing and typing, in and out of whatever trading system he or she may be using, always striving to get back to the customer with a good answer or confirmation in a timely manner.
The future
Consider this: what if such flow of activity went directly from trading partner to trading partner, and not by email or voice over telephone, person to person, but as an electronic message, system to system? Most of the cutting and pasting, parsing and typing of lists is no longer necessary. The raw underlying data will have gone directly into the user’s stock loan system. In some instances, the work related to the message can be completed without dealer intervention. In cases where dealer action is required, it happens on-screen, with no manual transfer of data, one system to another.
The underlying FIX messaging protocol is all transparent to the desk user. Think of FIX as system-oriented email—electronic documents that allow any one system to talk to any other system, and receive responses with updates and changes. Negotiated dealing with counterparts becomes key-strokes and mouse-clicks. If a loan request is received by your system at a rate you don’t like, don’t just accept or decline it. Kick it back with a rate you do like, add a comment, and wait for your borrower to respond.
Lest this all seem like magic, because it isn’t. It’s already the practice in other industries and the FIX messaging protocol is the perfect enabler for securities lending. Anetics has been using FIX messaging in customer communication for years. It is just a matter of time before you will wish to wire it up to your desk.
We at Anetics would be curious to hear from any industry participant that is also using FIX and if there is interest in collaborating on FIX standards for securities lending. It’s just a matter of time.
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