# Understanding FIX Protocol: The Standard for Securities Communication

## What Is the Financial Information eXchange (FIX)?

 The Financial Information eXchange (FIX) is a widely adopted communication protocol that enables real-time electronic sharing of [securities](https://www.investopedia.com/terms/s/security.asp) transaction details. Serving nearly 300 member firms, including majo [investment banks](https://www.investopedia.com/terms/i/investmentbank.asp), it stands as the leading standard for pre-trade, trade, and post-trade messaging. FIX ensures seamless communication within financial markets, fostering a faster and more accountable transaction environment.

The FIX has become the de-facto messaging standard for pre-trade, trade, and post-trade communication, as well as for U.S. regulatory reporting. It is compatible with almost every commonly used network technology. FIX Protocol, Ltd. owns and maintains the FIX system. The company was formed entirely to fulfill that purpose and to ensure the system remains in the public domain.

### Key Takeaways

*   FIX is a global protocol used for real-time exchange of securities transaction information among investment banks and broker-dealers.  
    
*   It has become the standard for pre-trade, trade, and post-trade communications, especially in equity markets.  
    
*   The FIX Trading Community, a non-profit entity, ensures the protocol remains open and continues to evolve.  
    
*   It enhances efficiency by reducing redundancy in communication and transaction processes.  
    
*   The protocol is widely adopted by both buy-side institutions and sell-side brokers in financial markets.

## How the Financial Information eXchange (FIX) Works

FIX communication covers texting, email, trade allocations, news, order changes, advertising, and [execution](https://www.investopedia.com/terms/e/execution.asp) reports. Mostly used for [business-to-business](https://www.investopedia.com/terms/b/btob.asp) (B2B) interactions, it is designed to improve business messages and transaction flow.

The FIX achieves this goal by minimizing redundancy and reducing time spent on telephone communications, written messages, transactions, and documentation. Funds, [investment managers](https://www.investopedia.com/terms/i/investment-manager.asp), and banking firms see clear benefits from using FIX. FIX systems transfer accurate and timely financial information concerning securities trades through and across security exchange houses.

Introduced in 1992 for equity trading between [Salomon Brothers](https://www.investopedia.com/terms/s/salomon-brothers.asp) and Fidelity Investments, the FIX protocol was implemented to provide for more efficient and accountable transactions and record-keeping, replacing a system that was handled mostly over the phone. Under the old system, indications of interest were often lost "on hold" or routed to the wrong trader.

The FIX has since gone on to become the standard electronic protocol for pre-trade, trade, and post-trade communication in equity markets and is increasingly being used in other markets, too.

> **Important**
>
> The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is the standard for back office messaging, while the FIX is the standard for front office messaging.

## Who Uses the Financial Information eXchange (FIX)?

The FIX is popular among both the [buy-side](https://www.investopedia.com/terms/b/buyside.asp) (institutions) as well as the [sell-side](https://www.investopedia.com/terms/s/sellside.asp) (brokers/dealers) of the financial markets. Users include mutual funds, investment banks, brokers, stock and futures exchanges, and other [electronic communication networks](https://www.investopedia.com/terms/e/ecn.asp) (ECNs). It is mainly used for equity transactions, although it can handle bond, foreign exchange, and derivatives transactions.

The FIX Trading Community member firms maintain and continue to develop the FIX messaging standard. Community members include several leading [financial institutions](https://www.investopedia.com/terms/f/financialinstitution.asp) around the globe. Work done by these member firms ensures the standard continues to evolve to meet new and emerging trading requirements.

Their actions also promote the adoption of FIX use worldwide. The FIX protocol itself is a non-proprietary, free, and open standard that is constantly being developed by its member firms.

## Future Developments and Trends for the Financial Information eXchange (FIX)

FIX continually evolves to keep up with industry and technology changes. In recent years, members have been discussing current issues and challenges, which include [cybersecurity](https://www.investopedia.com/terms/c/cybersecurity.asp), [digital currencies](https://www.investopedia.com/terms/c/cryptocurrency.asp) and [blockchain](https://www.investopedia.com/terms/b/blockchain.asp), execution transparency, and performance improvements.

Firms can download the [FIX implementation guide](https://www.fixtrading.org/implementation-guide) from the FIX Trading Community website for guidance.

## The Bottom Line

The Financial Information eXchange (FIX) protocol revolutionizes the way securities transaction information is shared globally, establishing itself as the standard for pre-trade, trade, and post-trade communication. Its use by nearly 300 member firms, including major investment banks, underscores its importance in the financial markets.

FIX enhances the efficiency of business communications by minimizing redundancy and improving transaction flow, benefiting investment managers, funds, and banking firms. As an ever-evolving protocol, FIX adapts to industry advancements, addressing challenges such as cybersecurity and blockchain. Those looking to implement FIX can access resources through the FIX Trading Community to stay informed on best practices and developments.

> **Article Sources**
>
> 1.  FIX. "[About](https://www.fix-events.com/Archives/2010/about.html)."
>     
> 2.  FIX. "[What is FIX Trading Community?](https://www.fixtrading.org/overview/)"