FIX protocol enhanced ahead of MiFID II, MiFIR

The Financial Information eXchange (FIX) Trading Community has announced enhancements to the FIX protocol to meet the requirements of the European Union’s (EU) Markets in Financial Instruments Directive, aka MiFID II, and MiFIR regulation. MiFID II is due to come into effect on 3 January 2018.

FIX Trading Community is the non-profit, industry-driven standards body that addresses business and regulatory issues impacting multi-asset trading across global financial markets. The FIX protocol was initiated in 1992 for international real-time exchange of information relating to securities transactions and markets.

The FIX Global Technical Committee has approved the latest changes, made to help firms meet the requirements of MiFID and MiFIR and now available to use within the industry. The enhancements “will help investment firms address MiFID related challenges such as trade reporting requirements, venue waiver indicators, algorithm and trader IDs and short-sell marking.”

“Members of the FIX Trading Community have been convening regularly since the summer of 2015 to address the impact to workflows that investment firms will face due to increased regulation,” the body announced in a statement.

“By walking through a number of different trading scenarios, members have been able to document what additional data will be required to be passed between investment firms and/or trading venues to meet MiFID II requirements.”

The FIX protocol is a free and open standard available to all investment firms and trading venues. There are now three extension packs that are available for firms to download and implement as part of their work on MiFID II. These are as follows:

  • EP206 – Clock synchronisation
  • EP216 – Post-Trade Flagging Obligations
  • EP222 – Critical data requirements identified by the sub-working groups on transparency, and order data and recordkeeping

“It is a milestone that everyone in the industry has been waiting for. Some of the work is the result of the cross-industry group’s collaboration too,” said Irina Sonich-Bright, business development AES Europe, Credit Suisse, co-chair of the FIX Trading Community MiFID II transparency working group.There is still significant work to be done but there is enough information there to trigger feedback and move forward with the IT development.”

Hanno Klein, Europe, the Middle East and Africa (EMEA) chair, Global Technical Committee, FIX Trading Community, senior vice president, Deutsche Boerse, commented: “MiFID II and MiFIR require a lot of effort from the financial community for regulatory reporting.

“During the detailed analysis conducted by the various FIX working groups together with the FIX Global Technical Committee, it turned out that the majority of business requirements from the European Securities and Markets Authority (ESMA) were already covered by the FIX Protocol, building on the foundational work completed for Dodd-Frank Act reporting requirements.

“We were able to re-use many of the existing concepts and workflows and have so far not needed to add a single new message to the FIX Protocol. This significantly lowers the impact on existing users of the FIX Protocol when passing information to each other to allow regulatory reporting to ESMA.”

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