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How FIX monitoring protects capital markets’ critical trade functions

If you only have 30,000ms to read:  

  • FIX is a fundamental, business-critical part of capital markets trading. 
  • Financial firms need to minimize FIX connectivity issues, accelerate troubleshooting, and reduce the risk of outages.  
  • To discover how FIX monitoring can support operational excellence and maximize trading opportunities, download whitepaper from GreySpark Partners and ITRS. 

Customers expect to complete a trade at the precise moment they choose, so they can execute at the best prices and make the most of market opportunities. To enable customers to do this, trading partners must ensure their IT operations are fast and resilient. Between 2018 and 2020, however, almost one-third of financial firms encountered an operational outage that they classed as notable, serious, or severe.  

One key element of many capital markets’ trade functions is the FIX protocol. FIX failures can have a sizeable impact on a business’s revenue, alongside its reputation as a trusted, reliable trading partner. Any issues with connectivity or latency that could lead to disruption present a high risk to traders.  

So, how can financial firms ensure FIX performance does not compromise their operational excellence and business success? 

Why FIX has become a fundamental of capital markets trading  

First, it is imperative to highlight the reason FIX is such an important part of financial firms’ trading operations. Since capital markets shift rapidly, every millisecond it takes to complete a trade matters. FIX protocol offers a standardized and automated way of sharing crucial information between parties.  

FIX protocol therefore decreases the need for human intervention and allows parties to complete trades far more quickly. It also supports regulatory compliance through offering a more transparent record of transactions and understandable audit trails that firms can submit to regulators.  

As with all components of IT operations, however, FIX systems are not immune to errors. Professionals responsible for the smooth running of live FIX sessions need a strong working knowledge to safeguard effective operations, pinpoint issues that could impact trading, and remedy them before that impact is realized.  

Overcome challenges to trading excellence 

From testing FIX connectivity before the markets open to keeping latency at a minimum and sustaining message flows across the day, professionals can encounter a range of issues. These include: 

Lack of visibility – Without a stable FIX connection, parties cannot execute a trade. If latency goes unchecked, firms risk impacting the price trades are executed at. An overview of connectivity status and current latency enables professionals to monitor trading communications and mitigate the threat of disruption. Genuine real-time insight is necessary to catch issues before risk becomes a reality.   

Time-intensive troubleshooting – When an issue occurs, those responsible for maintaining trading operations need to manually sift through FIX logs to get to the issue’s root cause and then figure out how to remediate it. This creates a lengthy process that can lead to lost business. As such, an automated means of surfacing contextualized insights into FIX issues can help inform and expedite next steps. 

System outages – If a system goes down, firms face severe financial and reputational impact. Restoring a FIX connection between parties after an outage can sometimes cause systems to duplicate orders, leading to issues with reconciliation. Robust FIX monitoring capabilities can help identify duplications and ensure they do not affect reconciliation. 

Requirements for effective FIX monitoring 

When investing in a FIX monitoring solution, decision makers should ask themselves a number of questions:  

1. Will I gain a consolidated view of FIX sessions? 

Trading communications are complex, so monitoring solutions must be able to deliver a comprehensive view of FIX performance in real time. This is crucial for boosting operational efficiency and providing visibility of potential issues that could threaten trading. 

2. How much flexibility does the monitoring solution offer? 

Financial firms typically operate with a diverse infrastructure spanning a mix of on premise and cloud environments. A robust FIX monitoring solution should have the flexibility to account for this and enable seamless operations.    

3. Will I have access to tools that enable operational excellence? 

Firms require more than visibility to sustain trading operations. From automated, real-time alerts to querying capabilities that let users conduct root cause analysis, robust FIX monitoring solutions offer tools that streamline detection, identification, and resolution.  

4. How does the solution support compliance? 

A FIX monitoring solution collects, collates, and contextualizes trade and systems data so that it is easily understandable, providing peace of mind for firms by ensuring they can readily meet regulator expectations. 

While FIX protocol has many advantages for capital markets, it can present challenges as with any other element of IT operations. Trading and IT professionals should carefully monitor FIX performance to safeguard their firm from the financial, operational, and reputational risks of errors and failures.  

For a deeper understanding of FIX and what a robust FIX monitoring framework looks like

 Download whitepaper