FIX, FpML, AND TWIST TO COLLABORATE ON FOREIGN EXCHANGE STANDARDS
Statement of Understanding
The global financial
services industry and its principal customers, through initiatives such as
decimalization, straight through processing (STP) and real time net settlement,
is demanding greater efficiency in the securities transaction life cycle. In
response to these demands, FIX Protocol Ltd. (FPL); the International Swaps and
Derivatives Association, Inc. (ISDA) and TWIST Process Innovations Ltd. have
agreed to join their efforts in developing and using a common industry protocol
for the Foreign Exchange markets (the Collaborators).
This document outlines
the steps and conditions that FPL representing the FIX Protocol, ISDA
representing FpML and TWIST Process Innovations Ltd. representing TWIST agree
are necessary to achieve this important goal.
Background
FPL is a non-profit
organization that owns the intellectual property rights of the Financial
Information eXchange protocol (FIX), which is provided for free in the public
domain. FIX is a globally recognized messaging standard that enables the
electronic communication of pre-trade and trade messages between financial
institutions, primarily investment managers, broker/dealers, and exchanges. An
entire industry of order management systems, network services, and software
service providers have grown out of the evolution of FIX as the front office
messaging standard. FIX presently exists in two syntaxes: “tag=value” format,
and XML format (FIXML). Within FPL, the Foreign Exchange Working Group has been
engaged with Foreign Exchange industry professionals to expand the development
and adoption of the FIX Protocol message suite to support Foreign Exchange
transactions.
ISDA is the global trade association
representing leading participants in the privately negotiated derivatives
industry. ISDA was chartered in 1985, and today has more than 650 member
institutions from 47 countries on six continents. These members include most of
the world's major institutions that deal in privately negotiated derivatives,
as well as many of the businesses, governmental entities and other end users
that rely on over-the-counter derivatives to manage efficiently the financial
market risks inherent in their core economic activities. Financial products Markup Language (FpML) is
the business information exchange standard for electronic dealing and
processing of financial derivatives instruments, developed and maintained by
ISDA. FpML establishes the industry protocol for sharing information on, and
dealing in, financial swaps, derivatives and structured products. It is based
on XML (Extensible Markup Language), the standard meta-language for describing
data shared between applications.
TWIST
Process Innovations Ltd. creates global standards that enable the end-to-end
automation of any company’s financial dimension of business processes. TWIST (Transaction Workflow
Innovation Standards Team) develops
practical standards that allow market participants to communicate
electronically with each other, whether using direct links, external service
providers or internal systems. TWIST
brings together representatives of leading corporate treasuries, banks, fund
managers, system suppliers, electronic trading platforms, market infrastructure
providers (including confirmation matching services, clearing & settlement
services and communication networks), consultancy firms and learning
organisations. TWIST is open to market participants and service providers, irrespective
of their size or role in the market place.
Points of Understanding
§
The Collaborators believe that agreeing on the universal business
meaning of information and message scenarios covering the financial trading
processing chain utilizing common messaging standards, will enable and
encourage the end-to-end straight through processing of foreign exchange messages between industry
counterparties, without regard to the network(s) used, the platforms employed
or the operating systems utilized.
§
The Collaborators will undertake a product coverage and business
process gap analysis with regard to the FX coverage in the three standards.
This gap analysis will serve as the basis for future developments in the FX
area.
§
The Collaborators will continue to support the foreign exchange
trading capabilities released in FIX for standardized F/X transactions. Further
enhancements to the specification (a set of “extensions”) will be forthcoming
with additional content specific to foreign exchange securities, consistent
with the recommendations from the gap analysis effort.
§
The Collaborators will continue to support and leverage the FpML
definitions for non-standardized F/X transactions governed under ISDA Master
Agreements. FpML will continue to
develop and enhance such XML-based messages and the Collaborators will seek to
embed the FpML-specific content within the FIX trading flow messages where
appropriate.
§
The Collaborators will leverage TWIST’s technical and business
expertise of the corporate F/X trading community. The TWIST Wholesale Trade Lifecycle
specification will be used as the basis for gap analysis of corporate
treasuries’ business requirements. The Collaborators will recognize and support
the use of TWIST’s overall process design and XML-based messages plus expertise
in other areas, namely cash management, commercial payments and collections,
working capital management and billing of financial services.
§
The Collaborators will leverage their extensive expertise with
XML-based representation and share resources in this regard.
§
Nothing in this Statement of Understanding shall be understood to
imply that any collaborator will not be able to act independently of any; or
all other collaborators, in the event that the circumstances warrant this
determination. The Collaborators also specifically agree that as an open
standards initiative, membership will be extended to such other organizations
that may from time to time present themselves as having a legitimate interest
in this area.
·
Nothing in this Statement of Understanding shall be understood to
prohibit any collaborator from making available any common work product to any
bona fide member of their respective organizations, subject to an over-riding
obligation to ensure that by doing so no warranties express or implied are
deemed to have been made by any party to this understanding.
* * * * * * * * * * * * * * * * * * * * * * * *
* * * * * *
The above Statement of
Understanding was developed on the basis of meetings and discussions involving
various industry leaders, including representatives of the Collaborators. The
undersigned officials of these respective organizations represent that they are
authorized to approve the points of understanding set forth hereinabove and
that they hereby commit each of their respective organizations to the mutual
implementation of such points of understanding in a manner consistent with
fostering the integrity of the Foreign Exchange markets.
|
Scott Atwell Global Steering
Committee Co-Chair FIX Protocol Ltd. |
|
TWIST Process
Innovations, Ltd. |
