Chapter 11
Communications Between Industry Participants
In Chapter 9 we learned that the principles of STP apply not just within the firm but also between the various firms involved in the transaction. In order to achieve STP individual firms have to be able to automate communications between other firms and other types of industry participants. This requires mutually agreed standards for the contents of messages as well as network facilities to transmit and receive these messages. All the world’s investment exchanges and settlement agents provide proprietary facilities of this kind and publish application programming interfaces (APIs) that detail how to interact with these applications.
As well as these proprietary systems there are a number of open systems that are used widely in the investment industry. Some of them are specific to some areas of the industry, such as individual instruments or individual stages in the trade cycle. There is, however, one standard, the SWIFT standard, that is used by all types of industry participants for most instrument types and at all stages of the trade cycle. Section 11.1 examines the role of SWIFT in detail.
In 1992 several industry participants set up the FIX standard, which is also widely used in the pre-settlement phases of the trade cycle. The FIX Protocol is examined in section 11.2. Other message standards are covered in section 11.3.
11.1 SWIFT
11.1.1 Introduction
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) ...
