The FIX Protocol industry standards body has produced a new version of the electronic message system to target use in high frequency trading venues.
The new standards are aimed at significantly reducing the complexity, or verbosity, of the FIX messaging language in order to be used as a low latency interface in high frequency trading environments. The standard, called ‘Simple Binary Encoding’ (SBE) is viewed as an alternative to the proprietary protocols currently used in high frequency trades.
Non-profit industry body FIX Protocol Ltd (FPL) said that the aim of the initiative is to allow trading firms using high frequency trading to benefit from cost effective and efficient communications by connecting to venues in a standardised manner. The SBE protocol has been designed to work with the latest version of the core FIX standard, which is increasingly used in trading venues and by exchange companies such as CME Group.
FPL said that the initiative will require extensive review and testing amongst industry users before it can be released, and a working document has now been published on which trading venues and firms are invited to consult.
Commenting on this announcement Hanno Klein, Deutsche Börse senior vice president and FPL member commented: “For the benefit of all financial institutions, the FIX standard has long become the preferred language for the application level of market infrastructure. With the development of an open binary encoding standard, we can finally also address market requirements for high-performance trading interfaces. "
Last year an update to FIX was developed that would allow the independent like-for-like comparison and tracking of trading speeds in high speed trading environments.