The FTLabs FIRE technology is available as a managed service to broker-dealers that need to integrate their systems with that of many 3rd party ECNs and data vendors without hiring or developing in-house expertise in using the FIX protocol or maintain proprietary network connections to each vendor. Using FIRE as a managed service allows a broker-dealer to maintain a single network connection to the FTLabs FIRE middleware that can be used to route data to all of the other vendors connected to the FIRE network.
By using FIRE as a managed service, the broker-dealer can acquire the huge advantages of the FIRE system while paying one reasonable monthly fee rather than making a capital investment to license and maintain the system internally.
Product Overview
As competition in the market place increases and regulatory reporting times decrease, fixed income trading firms must automate and improve their efficiency or they will be left
behind. Traders want to maximize exposure of fixed income offerings and bids across multiple distribution channels while maintaining the ability to execute instantaneously without the risk of overselling inventory. The operations staff wants trades to automatically flow through to the clearing vendor in order to meet reporting and compliance requirements. And, management wants to see increased trading volume and higher profits.
Responding to these challenges often requires integration and interaction between multiple computer systems – both internal and external to the firm.
Financial Technology Laboratories, Inc. (FTLabs) provides a suite of system integration and routing solutions that address the interfacing requirements between trade order
management systems, clearing vendors, and multiple fixed income Electronic Communication Networks (ECNs) and Alternative Trading Systems (ATSs). This suite of products includes server-based routing systems for quote, orders, and trade reports transmission, and a variety of client solutions for connecting using different system. Taken together, these components comprise the FTLabs Fixed Income Routing Engine™ (FIRE™) server.
FTLabs FIRE™ uses the Financial Information Exchange (FIX) protocol messaging system to communicate from end to end throughout the system. Other messaging protocols or proprietary data formats that are used by connected systems are translated into or out of the FIX protocol as necessary in order to allow all of a firm’s internal systems and external vendor system to communicate freely. Connecting another system to the network merely requires the addition of a gateway module to convert the data flowing from that system to the FIX protocol that is used throughout the network.
The primary uses of the FIRE™ server currently include quote publication (offers & bids), order execution, and trade reporting, but it can also be used for other services needed by fixed income trading firms such as drop-copy reporting, request for quote (bids wanted
& offers wanted), regulatory reporting, and security master updates.
Quote Publication & Order Execution
Traders may publish executable quotes from their internal trading system simultaneously across the major ECN platforms such as TheMuniCenter, Tradeweb, Knight BondPoint, and Bondtrac. This assures the broadest distribution of the offer as the users on each ECN receive the quotes simultaneously. For examples, when a bid is received from one
ECN, the FIRE™ server ensures that an updated offering quote for a reduced quantity is
immediately sent to all ECNs so that the position is not oversold. Then, the system either executes the trade or delivers the bid to the trader’s desk for manual confirmation.
Trade Reporting
In addition to expanding distribution and simplifying management of the ordering process, the FIRE™ server offers straight-through processing (STP) capabilities that can streamline the post-trade reporting of trades. Once the order is executed, the trade report is sent back to the FIRE™ and routed to the clearing service or other systems. This instantaneous processing assures that the firm can meet regulatory and compliance reporting requirements without any manual involvement of the trading or operations staff. A component of the FTLabs FIRE™ server called a clearing gateway is used to communicate with the clearing vendor. The clearing gateway can convert the trade message to the proprietary communication protocol used by the firm’s clearing provider (for example, Pershing’s UTF format) and route to the clearing firm for processing. Acknowledgements and other alerts messages from the clearing provider are converted back to the FIX protocol and routed back to the trader for storage or processing locally.