FIX Trading Community, the non-profit, industry-driven standards body at the heart of global financial trading, today announced the release of a Best Practices document for the automation of the Initial Public Offering (IPO) process.
In 2014, a number of Buy-side companies met to discuss ways to make the placing of orders for equity IPOs and fixed income New Issues more efficient and transparent. By trying to replicate the order placing process in the secondary market and replace the current manual process, the goal was to remove the risk of error in transmission or misinterpretation by the receiver of those placed orders.
The Best Practices document sets out recommendations to create a straight through process (STP) for the electronic transmission of new issue orders using the FIX Protocol through from an asset manager’s Order Management System, to the new issue Deal Managers and receive allocations from it. To access this document, please click here.
The benefit from the asset manager’s perspective is not only greater clarity and efficiency but this will also provide the added value of a fully audited, time-stamped order generation process that has already cleared an asset manager’s pre-trade compliance checks to ensure no breach of mandate or risk control before it could be sent to the deal manager.
Among the Buy-side companies supporting this initiative are: American Century, AXA IM, Baring Asset Management, Capital Group, Fidelity Worldwide Investment, J.P.Morgan Asset Management and Newton.
Adam Conn, Head of Dealing, Baring Asset Management, Co-Chair FIX Trading Community Global Buy-Side Committee, commented, “The FIX Global Buy-side IPO working group is seeking to use automation to mitigate risks associated with the manual placement of new issue applications and receipt of allocations, which may be amongst the largest single orders a firm will place. We are mindful of doing so in a manner that lends itself to future evolution of technology in the bookbuilding process in whatever direction that takes. There is still a lot of work to be done but would like to take this opportunity to thank our industry colleagues for their support thus far.”
Scott Atwell, Manager FIX Trading and Connectivity, American Century Investments, noted, “Leveraging the FIX Protocol to electronically communicate IPO order-related information is a natural extension to the existing FIX-based integration Buy-side Order Management Systems already have in place with their brokers. FIX’s Global Buy-side IPO Working Group was able to bring together a number of Buy-side firms with similar needs, and we were able to specify how firms can easily use existing FIX messages to support IPOs.”
As recognition of the strong collaborative efforts for this initiative, The Trade awarded the FIX Trading Community the “Buy-side Project of the Year Award for 2014” last November recognising the FIX Trading Community’s Global Buy-side IPO Working Group effort. The FIX Trading Community’s members work together to address real business issues and are delighted that its EMEA Investment Management Subcommittee has been acknowledged for their work.
FIX Trading Community is the non-profit, industry-driven standards body at the heart of global trading. The organisation is independent and neutral, dedicated to addressing real business and regulatory issues impacting multi-asset trading in global markets through standardisation, delivering operational efficiency, increased transparency, and reduced costs and risks for all market participants. Central to FIX Trading Community’s work is the continuous development and promotion of the FIX family of standards, including the core FIX Protocol messaging language, which has revolutionised the trading environment and has successfully become the way the world trades.