FIX Trading Community responds to ESMA on European trade regulations

Non-profit industry standards organization FIX Trading Community has submitted its responses to a series of questions posed by the European Securities and Markets Authority (ESMA), relating to the recent discussion paper which was issued to major industry participants in order to assist with the formulation of rulings surrounding trade processing within executing venues.

Among FIX Trading Community’s responses were recommendations that the with regard to the suspension or removal from trading of derivatives that are related to financial instruments, FIX Trading Community proffered that notification should use industry standard identifiers (e.g. for instrument identification) and that this information be disseminated using a single consistent open standard protocol to reduce implementation cost to the industry.

The organization cites that it is specifically important that these notifications identify the ‘instances’ of an instrument being suspended (e.g. including any rights, warrants, options, futures, associated companies, other listings).

Additionally, with regard to the proposed issuance of trade identifiers, FIX Trading Community has responded to ESMA by stating that an industry standard for trader identifier would be required here. The organization does not have a specific view on whether end-client traders using Direct Market Access or Sponsored Access facilities should be identified, but does recommend that should such an approach be taken, that the same industry standard for trader identifier should apply to end-client (e.g. non-member) firms .

In addition, FIX Trading Community recommends that, where possible, all instrument reference data referred to elsewhere in these papers (e.g. identity of liquid instruments, standard market size, identity of most relevant market etc.) be covered under this topic of instrument data distribution.

It is the view of FIX Trading Community’s members that instrument reference data distribution and management is unnecessarily complex and represents a significant operational cost to the industry, so any move towards standardising and consolidating the way this data is managed and distributed will be strongly supported.

It is also worth noting that, while not directly referenced in these papers, it is desirable that the authorities and industry participants establish and adopt a common instrument identification schema that meets all the requirements laid out in these papers. FIX Trading Community clearly supports the use of industry standard identifiers and have done prior work to recommend how those be used in the context of instrument-related concepts of ‘listing’, ‘tradable instrument’ and ‘fungible instrument’.

The complete set of responses from FIX Trading Community can be viewed by clicking here.

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