Who Use of Collateral messages between their counter party?

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We are planing to restructure our connection protocol between our counter party , and wondered if anyone using any of the standard FIX messages (such as the Collateral messages AX, AZ, BA, BB etc) for collateral management?
I saw some companies using ISO 20022 like ASX, but I cannot find public information which clearing house or stock exchange are using FIX for collateral management. Could anyone give me some references?

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The FIX messages are in use by a variety of organizations. A major interbroker dealer helped to create them in 2003 for use in collateral substitution processes between brokers. These messages are also used by major derivatives clearing houses for asset custody. There is a major asset manager within the US that has extended the party information and is using them for collateral management. The messages are well designed and fit for purpose for a variety of collateral use cases.

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Search for “FIXML collateral management” in Google. It shows references to CME (https://www.cmegroup.com/clearing/risk-management/files/cme-collateral-management-fixml-api.pdf) and Eurex. FIXML syntax is preferred in the post-trade area instead of the classic FIX taq=value syntax.

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Thanks for your answer.
Do you think FIXML, FIX, FpML which is the mainstream?
Could you provide some companies using those protocols for reference?
Thanks for your help.

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I did not distinguish by asset class, i.e. CME and Eurex are both in the (listed) derivatives business where FIXML dominates. Other asset classes use FIX tag=value for post-trade. FpML is used for OTC derivatives in general. I do not have a list of companies and can only point to Google to get some answers. Many publish their FIX APIs. Companies can use FIX without registering their usage with FIX Protocol. It would be great to have such information. But maybe others read this forum entry and respond to say what and how they use FIX for collateral management.

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Recent versions of FIX Protocol extend its support to transact Post-Trade messages. Major Stock Exchanges and Clearing Houses are currently using or migrating to FIX Protocol to improve latency and security requirements. Lot of market players globally use FIX Protocol for their Collateral Management activities. Even the latest FIX 5.0 version supports Collateral Management for Margin Requirements, Large Trade Reporting etc. Significantly NASDAQ & LME uses FIX Protocol from Venue side and EUREX as a Clearing House has been using FIX Protocol for Collateral Management.

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Thanks for your reply, but could you explain more about “improve latency and security”? As we know FIX is common standard, it is slower than native protocol. And FIX message is transferred in plain text and not secure, unless through other secure tunnels. Thanks for your help.

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This is a misunderstanding. FIX messages are only transferred in plain text (ASCII) when using ASCII encodings such as tagvalue or FIXML. There are also binary encodings such as SBE (Simple Binary Encoding). See https://www.fixtrading.org/standards/ for a complete list of available encodings. This also includes standards on how to use FIX together with other standard encodings such as JSON, Google Protocol Buffer or ASN.1.

Whether FIX or a native (aka proprietary) protocol is faster depends on the implementation and not on the protocol itself. When systems are built with an internal proprietary protocol but a standard external interface, you need to translate between the two. The closer the internal encoding comes to the external one, the smaller/faster this translation layer will be. It is neglectible when the translation is reduced to a syntax conversion. Semantic conversions are expensive, e.g. having an n:m relationship between internal and external messages for a given use case.

Security is a different topic and FIX has decided early on to not reinvent the wheel, similar to its usage of TCP/IP and UDP. FIX has recently defined FIXS (https://www.fixtrading.org/standards/fixs/) as a standard on how to use FIX over TLS.

It is important to understand the scope of FIX and how it interacts with other standards on all layers. This also happens on the application layer where FIX supports ISO-standards to express things like currencies, market places (MIC) and instruments (CFIcode).

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