Financial Information Exchange (FIX) API

The Financial Information Exchange (FIX) Protocol is a message standard developed to facilitate the electronic exchange of information related to securities transactions. It is intended for use between trading partners wishing to automate communications.
The Financial Information eXchange (FIX) protocol is an electronic communications protocol initiated in 1992 for international real-time exchange of information related to the securities transactions and markets. With trillions of dollars traded annually on the NASDAQ alone, financial service entities are investing heavily in optimizing electronic trading and employing direct market access (DMA) to increase their speed to financial markets. Managing the delivery of trading applications and keeping latency low increasingly requires an understanding of the FIX protocol.

The FIX protocol is a technical specification for electronic communication of trade-related messages. It is a self-describing protocol in many ways similar to other self-describing protocols such as the newer XML; XML representation of Business content of FIX messages is known as FIXML but FIXML is not widely deployed.

More about Financial Information Exchange (FIX) API

FIX (Financial Information Exchange) API (application programming interface)  is an electronic communications protocol for financial information exchange. In our case, we use it to allow communication between a client, trader, investment fund, or broker and a liquidity provider.

FIX API is a universal standard. It’s used by numerous banks, prime brokers, and hedge funds. The origins  of FIX API date back to the early 1990s, when several volunteer programmers were seeking opportunities for communication support when trading stocks . In 1998, this team of programmers started a non-profit company called FIX Protocol Limited (FPL), which focused on expanding, developing and supporting the protocol.

Reasons for a client to start using FIX API

• The client is not satisfied with existing financial platforms and interfaces because it is impossible to control all system functionality simultaneously.

• Limitations of existing interfaces. For example, many well-known platforms need two or more ticks to fill an order, which is unacceptably slow for high-frequency strategies.

• A need for safety and maintaining the anonymity of a client’s automated systems.

• A desire to cross-connect with the liquidity provider.

Requirements to create a FIX API connection

• Connection details for a test (UAT) environment, which should be used for testing before making a live connection.

• The FIX API specifications document, which is like a handbook for the protocol. Here is an excerpt from the document:

• Standard Header MsgType = b 131 QuoteReqID String. Unique identifier in response to Quote Request (35=R) Example: 131=RequestQuote1

• An experienced programmer. From my experience, most programmers with standard protocol skills such as HTTP, telnet, TCP, or Java will easily be able to set up a connection.

Ideally, our recommendation is to use a cross-connect with the liquidity provider, which is a physical connection between the control panels using patch code. Beginners may use a socket adapte. Boston Technologies provides cross-connects in NY4, LD4 and TY3 datacenters.

There are many benefits of using FIX API. You will have total control over the process of transferring and receiving data without any kind of intermediary or middleware software. Contrast this with the MetaTrader 4 (MT4) execution chain:

Client Terminal => MT4 Trade Server => MT4 Bridge => Aggregator => Liquidity Provider

A properly configured infrastructure will deliver:

• Faster overall execution speed.

• Ability to design a personalized interface.

• Ability to use your own software, customized to the trader’s needs.

• Opportunity to use various order types such as market or limit.

However, there are some disadvantages:

• You will have a new responsibility to maintain the functionality and smooth performance of the system.

• If you were previously using Meta Trader 4, you will need to reprogram any automatic systems from MLQ4.

• There will be additional expenses related to the programmer’s work and cross-connect (hosting at a high grade data-center may cost you $1000 per month or more depending on the agreement).

Boston Technologies’ partners, Boston Prime Ltd. and BT Prime Ltd., provide its clients with an opportunity to connect to our execution engine via FIX API in the NY4 datacenter in NY, the LD4 data center in London, and the TY3 datacenter in Tokyo. The company provides consulting services to ensure smooth integration of existing platforms and assistance in searching for qualified programmers.