Another question from the New Guy...

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Imported from previous forum

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Hi again,

I’m doing a bunch of reading and research on the alphabet soup of XML being used in Electronic Financial Information exchange and have run across a bunch of standards and definitions. I’m particularly interested in those that are apllicable to Securities, especially with respect to important initiatives I am starting to learn about (STP, T+1 in particular). Keep in mind I am technical, not financial so if my questions seem simple it’s because I’m trying to learn as much as I can.

Here is my understanding of the development so far:

SWIFT & ISO 7775- First set of messages- EDI style, no XML

ISO 15022- Next, more comprehensive and extendable set of messages- again not XML based.

FIX - Another securities protocol, supports more pre-trade and post-trade activities than the SWIFT based protocol and messaging standards. Also not XML based.

Now we are approaching FIXML, SWIFTML and what seems to me to be the aggregate ISO 15022 XML- which appears to still be in the authorship stage.

There are various other pieces in the mix here: MDDL, NewsML, FpML, FinML, OFX, RIXML etc.

I know some of these are pretty specialized, and some of them are more retail than institutional, and some are proprietary.

Here’s are my questions:

  1. Is STP and T+1 ‘technically solved’ with ISO 15022 ? Is there any kind of consensus around adopting ISO 15022 XML as part of implementing T+1 ? Is ISO 15022 XML complete, or near completion ?

  2. I assume FIX and SWIFT (ISO 15022) are both widely used for trade activity. Why two protocols ?

3

I would answer that different standards have traditionally focused on different parts of the trading process. FIX is focused and widely used in the "front office" space which encompasses pre-trade (IOIs, quotes, etc) and Orders and Executions. Think of this as the information communicated between two trading desks. SWIFT is a network which transmits ISO messages (775 and 15022) which are commonly referred to as "SWIFT messages" and has its roots in messaging focused on settlement (back office). Other protocols have been focused on pieces in between (i.e. ISITC for communication between institutions and custodians which has been incorporated into ISO 15022). Most of the interoperability focus has been on areas where there is either a gap or overlap such as post-trade, pre-settlement. Harmonizing the various protocols to ensure one can successfully flow from one type of communication to antoher is more likely to promote STP than a single protocol for everything, in my opinion. The prior statements are to help give you an idea vs. definitively answer your question.

I suggest that you review "Working Groups", "ISO XML" on the FIX website as it has a "FAQ" and other documents which I think will aid in improving your understanding of this complex area. The FIX website also have links to most of the standards you listed under "More Information", "Related Links".

> Hi again,
>
> I’m doing a bunch of reading and research on the alphabet soup of XML being used in Electronic Financial Information exchange and have run across a bunch of standards and definitions. I’m particularly interested in those that are apllicable to Securities, especially with respect to important initiatives I am starting to learn about (STP, T+1 in particular). Keep in mind I am technical, not financial so if my questions seem simple it’s because I’m trying to learn as much as I can.
>
> Here is my understanding of the development so far:
>
> SWIFT & ISO 7775- First set of messages- EDI style, no XML
>
> ISO 15022- Next, more comprehensive and extendable set of messages- again not XML based.
>
> FIX - Another securities protocol, supports more pre-trade and post-trade activities than the SWIFT based protocol and messaging standards. Also not XML based.
>
> Now we are approaching FIXML, SWIFTML and what seems to me to be the aggregate ISO 15022 XML- which appears to still be in the authorship stage.
>
> There are various other pieces in the mix here: MDDL, NewsML, FpML, FinML, OFX, RIXML etc.
>
> I know some of these are pretty specialized, and some of them are more retail than institutional, and some are proprietary.
>
> Here’s are my questions:
>
> 1. Is STP and T+1 ‘technically solved’ with ISO 15022 ? Is there any kind of consensus around adopting ISO 15022 XML as part of implementing T+1 ? Is ISO 15022 XML complete, or near completion ?
>
> 2. I assume FIX and SWIFT (ISO 15022) are both widely used for trade activity. Why two protocols ?
>
>
>