Although the FIX protocol has significant market share, the exchange specific protocols (also known as \u201cNative\u201d interfaces) have found a robust backing with individuals using low latency trading.<\/p>\n
The intended trading messages are shared in a document, XML message, FpML (Financial merchandise mark-up language), etc., between two financial institutions.<\/p>\n
Industry Players:<\/strong><\/p>\n Trading Protocols can be utilized by financial institutions like broker-dealers, exchanges, institutional investors, and others in the industry to communicate among each other. FIX\u202f(Financial Information Exchange)\u202fis a highly scalable electronic communication protocol to facilitate the real-time exchange of information related to financial markets. FIX is developing a key role in the post trade area, as over 80% of buy-side companies and over 95% of sell-side companies surveyed currently support FIX for post trade allocations.<\/p>\n The FIX trader community has around 1,10,000+ registered members and 275+ company members, including several large investment banks. Globally, there are 3000+ products and services, provided by 500 suppliers, that cover the market information demand of the financial operators: from real-time instrument prices to reference data.<\/p>\n FIX Architecture:<\/strong><\/p>\n FIX consists of two layers:<\/p>\n Session layer:<\/strong> The session layer provides high performance. There is sometimes a bi-directional stream of ordered message transfer between two parties; thus, the handshake between those parties, data integrity, message delivery, and sequencing are handled by the session layer.<\/p>\n Application Layer:<\/strong> This deals with business-specific functions like order creation, cancellation, replacement, etc., and it parses the execution reports and subscribes to the market data.<\/p>\n FIX Message components:<\/strong> Header:<\/strong> The tags included are:<\/p>\n Body:<\/strong> It contains specific session and application message content.<\/p>\n Trailer:<\/strong> It includes only one tag, i.e., Tag10=checksum. The tag10 value is calculated by summing each byte of the message. (excluding the checksum field). This checksum is then changed into a modulo 256 number for transmission and comparison.<\/p>\n Trading systems need to process huge amounts of data in real time, and the accuracy of data is very crucial to avoid huge losses in terms of money and reputation. Trading systems have complex terminology and business rules, and hence, testing has become an important role in the effective delivery and efficient functioning of trading systems.<\/p>\n Key Challenges:<\/strong><\/p>\n FIX testing is classified into 2 categories:<\/p>\n Session Layer Testing:<\/strong><\/p>\n The FIX initiator will open a socket for the FIX acceptor. Once communication has been established, the first FIX message will be a Logon message. The FIX acceptor validates and accepts the Logon message, and then the acceptor will send a Logon message back to the initiator confirming the session started.<\/p>\n If the logon request validation fails, the socket gets terminated. If the Logon request validated successfully, the basic FIX connection will be established, and the exchange of messages can occur.<\/p>\n Testing the Session Layer includes message delivery, message sequencing (inbound and outbound), reset sequence, sequence replay, and duplicate messages whenever required.<\/p>\n Application Layer Testing:<\/strong><\/p>\n The application layer contains all the business validations. Testing the Application layer includes all the below scenarios.<\/p>\n Business Validation Areas:<\/strong><\/p>\n The efficiency of testing the protocols can be greatly enhanced by leveraging protocol testing tools such as Simulators, Certification tools, Monitoring suites and so on that greatly help in mimicking counterparties, carryout certification tests, effective session management, etc.<\/p>\n Conclusion:<\/strong><\/p>\n Cigniti has a dedicated pool of FIX testing experts who have hands-on experience with various FIX testing tools as well as protocol validation SMEs. We follow a systematic approach for scenario generation, and we do have a set of customizable test cases and test data that help in reducing the testing time and effort and Hands on experience on a wide array of protocol testing tools<\/p>\n![\"Industry](\"https:\/\/cignitiblog-e5e3.kxcdn.com\/wp-content\/uploads\/industry-players-498x438.png\")
Some of the benefits of the Electronic Trading protocols can be recited as below.<\/p>\n\n
![\"FIX](\"https:\/\/cignitiblog-e5e3.kxcdn.com\/wp-content\/uploads\/FIX-message-components-833x383.png\")
FIX message consists of three main components. The order of those components should be maintained.<\/p>\n\n
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