New roadmap standardises messaging

The roadmap is the joint project of Fix Protocol (FPL), Financial Products Markup Language/International Swaps and Derivatives Association (FpML/Isda), the Society for Worldwide Interbank Financial Telecommunication (Swift) and the International Securities Association for Institutional Trade Communication (ISITC).

The roadmap is a matrix that allocates messaging protocols Fix, ISO (encompassing ISO 20022, ISO 15022 and Swift MT messages) and FpML to specific business functions - pre-trade, trade, post-trade, clearing/pre-settlement, asset servicing, settlement and pricing/risk/reporting - across the main asset classes. The roadmap also provides further details on messaging use for the processes within each business function.

Jim Northey, co-chair of the FPL Americas regional committee in Houghton, Michigan, said although "nothing is enforceable", the intention of the roadmap is to show participants where they should be investing in technology.

"The reason we call it an 'investment roadmap' is to let people know that, if they spend their money in these areas, there is higher probability they would not have to make future changes or end up with redundant messaging protocols," he said.

The roadmap is seen as laying the groundwork for moving towards one common financial messaging model, ISO 20022, while maintaining the existing independent protocols. Swift uses ISO 20022 XML messages as the basis for its MX messages, some of which are available now, while a proposal is in place within the relevant ISO governing bodies for the ISO 20022 standard to be expanded to provide support for alternative syntaxes, such as Fix, Fix ML and FpML, explained Northey.

"There seems to be an emerging understanding that one message syntax is not necessarily in the industry's best interests, while a common data model is," said Northey.

By outlining the transition points during the trading process at which a user should shift from using one standard to another, the groups said the roadmap will assist with the improvement of interoperability between the standards.

For forex trading, the organisations have agreed pre-trade and trade functions should be delivered by Fix, while post-trade functions should be delivered using either the Fix or ISO standard. Clearing, pre-settlement and settlement have been designated the function of ISO, while pricing, risk and reporting is designated to both ISO and FpML standards.