George thanks for gaining some market attention for FIX standards with the title of your post. Having worked with you since the late 1990s, I appreciate your evangelism and support of FIX. Most folks don't realize, that in addition to your evangelism and support of FIX, you also had a major role in proving the viability of Java for Wall Street. We benefit from your thought leadership.
I want to reply in my role as one of the FIX Global Technical Committee Co-chairs.
From my experience each time I see a plateau and think that we have finally reached a saturation point with FIX there is another burst of adoption and growth. We are in one of those phases now, with FIX automation extending further out to investment advisors and advanced individual traders. There is a burst of activity around the buy side, fixed income, and swap execution facilities. We are seeing frontier markets using FIX to improve market quality and enable foreign investment.
Regarding binary interfaces, FIX two years ago formed the FIX High Performance Working Group (HPWG) led by Fred Malabre of The CME Group.
We are completing our HPWG work and are looking for market participation in taking our release candidates to full draft status by testing both functionality and interoperability. We recognize in a very narrow environment of quoting, high frequency trading, the existing FIX session layer is not fit for purpose. However, order routing to venues is not only fit for purpose, its use is being expanded globally. The creation of proprietary interfaces built primarily at the request of major high frequency trading market participants has reached its high water mark and there is a move and interest in using standard interfaces.
As part of our next generation FIX initiative this year we see the need for multiple encodings of the FIX business messages. We need to be able to integrate the FIX business processes, as defined by our application messages, into the environment using a number of industry standard and fit for purpose encodings and messaging technologies.
The work completed so far by the HPWG is:
High Performance and Standards Compliant Encodings
Simple Binary Encoding Release Candidate 2 status. This protocol addresses the need for a simple direct content accessible binary message format similar to those in use in various proprietary protocols, with the added ability to easily extend message formats. Don Mendelson for the CME and a group of FIX and industry participants have done excellent work on a flexible approach to binary encoding.
Google Protocol Buffers Encoding - supporting FIX in a standard manner over a de facto industry standard from Google.
ASN.1 Encoding - compatibility with the international standard message encodings, widely in use in the Telco and network management verticals.
In the future we plan to define an encoding for JSON.
High Performance FIX Session Layer
The first release candidate of FIXP - the new FIX performance session layer is being submitted to the GTC this month by our HPWG Session Layer Subgroup. FIXP is derived from the functionality provided by NASDAQOMX SoupBinTCP, UFO (UDP for Orders), and MoldUDP (Multicast data distribution). The intense, focused engineering work on FIXP is being led by the XMIT protocol developed by Pantor Engineering as part of their Blink Protocol. We are building something that is not intended to innovate, but instead to standardize and package successful proven functionality into a clean, consistent, and quality manner.
In addition, our HPWG application level optimization group are addressing the features of Ouch that are needed within FIX to support high volume quoting, market making, and automated trading, usually associated with high frequency market participants.
Most importantly from my perspective, FIX is working aggressively on a fully thought out, fit for purpose, modern event driven market data interface derived from the Itch market data protocol. Yuval Cohen at E-trading Software on behalf of the community conducted an extensive survey of existing venue implementations of Itch-like protocols. What we found from this survey is that there is a wide variability across the various Itch implementations in areas such as low level message format, messaging, recovery, and business functionality. We think the industry can greatly benefit from a well thought out, fully defined, and ready to implement event driven market data model closely based upon Itch that is integrated with FIX, without the limitations and incompleteness and inconsistencies in the existing Itch implementations.
To conclude, far from usage decreasing, standard FIX usage is expanding, and FIX Trading Community created an improved standardization process for new technical standards intended to increase "fit for purposeness" of solution, reduce complexity, and most importantly minimize variability across implementations. Especially to minimize variability.
We now need industry participants to help build interoperable reference implementations of these protocols so that we can accelerate adoption, lower the cost of adoption, and address interoperability and compatibility issues from day one.