Making FIX Clear
Real-time clearing will soon be a real-life benefit for members of the Chicago-based Options Clearing Corporation. The OCC has recently implemented a clearinghouse system enabling the firm to accept, clear and send out trades in real time.
To do so, the clearing corporation has tapped into technology from Ascential Software, a Westboro, Mass.-based vendor specializing in data integration. The solution, Ascential DataStage Enterprise Edition, transforms data into FIXML, an XML-based messaging standard, to be distributed by the OCC's clearing system, Encore.
The addition of real-time processing is part of a larger update to the firm's framework, explains Mike McClain, first vice president and head of applications development at the OCC. The OCC initially began its relationship with Ascential about a year ago, because of the vendor's capability for FIXML messaging, he says. In addition, the firm uses the software to connect many of its internal data stores, using Ascential's extract, transform and load capabilities.
While the OCC often builds technology solutions in-house, he continues, "The Ascential tool gives us a quicker time to market and requires less maintenance. Now we don't have to write programs to connect all of our systems."
The OCC first introduced the concept of real-time inbound trade data from exchanges, and it found that real-time outbound data to its member firms was the next logical step, says Geri Love, first vice president of member services for the OCC. She explains that the clearing corporation's previous method of batch processing for outgoing trade data could be time consuming and error-prone. "In batch processing, you don't discover errors until they're a day behind you, and it's a very manually intensive process," she says. "Real time gives us earlier exception processing."
McClain points out that the implementation of FIXML has not come without hardships. "The technology aspect was extremely challenging. FIXML is new to this organization and to the industry at large. It's not tried and true, and there is not a lot of experience in the industry to help out," he says. However, he adds that being a leader in FIXML enables the OCC to help develop the standards to fit its own needs.
Love says that the next step in the OCC's Encore project is to take inbound data from its member firms in real time. However, before that can begin, its member firms must build out their FIXML capabilities. While the OCC is using FIXML for messaging, not all of its member firms have implemented the standard yet, so the clearing corporation is still offering batch processing on outbound data where necessary.
However, Love expects that all members will use FIXML in the next 18 months. "Several are anxious to get on FIXML, and some we will eventually have to talk into converting. Every [member] is different, and each [conversion] is very customized," she says, noting that the cost of conversion can be an obstacle. "Some back-office systems may not be able to handle it right now. Front-end systems are often in real time, but back offices are not."