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Fixed Income Trading: New venues

A simple question came up recently in a conversation – how many new Fixed Income trading venues are there?  I could not think of anywhere th...

Tuesday, 3 January 2017

FIX: Co-located onboarding?

FIX testing is very much regarded as an unglamorous part of the financial technology landscape.  But it's essential for most electronic trading relationships to work (yes, other protocols are available such as ITCH/OUCH, but I would suggest that in value terms traded per day FIX is king of the hill).


A typical on-boarding process involves the firm receiving orders providing a rules-of-engagement document to the sender of orders.  Then a series of emails, conference calls and meetings to iron out any quirks or issues, a formal testing session or sessions, production of a proof-of-outcome of testing and finally a go-live test trade.


This can be slow, and so recently I proposed a different model - "Co-located onboarding".  What does this mean?


Simply put, the firm receiving orders provides deskspace, wifi and dedicated staff to sit with an onboarder from the firm sending orders using a laptop.  Simply run the onboarding tests with remote access back to the core systems.


Downsides:
  1. Requires a paradigm shift away from the idea of onboarding as being ripe for offshoring
  2. Requires security policies to allow remote access to test trading systems
Upsides
  1. Faster
  2. Cheaper
  3. Production of combined proof-of-outcome is much easier
  4. Improved communication provides better outcomes
Clearly this won't work in every case - if you're based in Paris and your counterparty is in Chicago it's a problem.  But if you are in Mayfair and your counterparty is in the City, it can work.


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