“What Is” the FIX Protocol?

The Financial Information Exchange (FIX) protocol is an electronic system of communication used to aid the processing of financial transactions and trading-relation communication such as Indications of Interest (IOIs). It is most commonly used for equities trading but has been gaining acceptance for many other types of securities.

The FIX message reads as a series of complex numbers and codes, similar to HTML. When sending a message, users must enter the following information into the database: identification of the message by type, field by tag number, field by name, and items by regex. In computing, the term regex is used as an abbreviation for “regular expression,” which is a type of programming language read by a processor that decodes texts.

Using FIX increases the speed and efficiency of processing financial transactions, and decreases time spent on phone conversations and paper-based messages. Moreover, FIX is supported through multiple forms of communication including: email, texting, and trade allocations, among others, making it easier for parties to use FIX in various situations. In order to ensure the secure delivery of messages, FIX uses its own version of XML called FIXML.

The organization, FIX Protocol, Ltd. was founded in 1992 to foster the acceptance of FIX by creating a global language for trading financial instruments. FIX was first used by the equity departments of Salomon Brothers and Fidelity Management. Since its establishment, FIX has slowly expanded and is now known as the most common form of communication for front-office trading. However, although FIX initially began as a form of communication for pre-trade and trading transactions, FPL officials and member firms have been urging the use of FIX for post-trade and back-office functions to provide a front-to-back office continuity for messaging.

FIX is a public domain offering and free of charge for users.

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