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J A N U A R Y 2 0 0 5 FIX Status update within the Fixed Income arena.

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Presentation on theme: "J A N U A R Y 2 0 0 5 FIX Status update within the Fixed Income arena."— Presentation transcript:

1 J A N U A R Y 2 0 0 5 FIX Status update within the Fixed Income arena

2 Fixed Income process flows Business drivers for using FIX Current state of FIX for Fixed Income Real life example: JPMLink Agenda Gaps & Issues

3 Allocations Confirmations  Electronic trades  FIX trades  Voice trades Matching/reconciliation Fixed Income process flows Purpose  Market discovery  Order management/upload Indication Of Interest (IOI) Market data Pre-trade allocations Purpose  Automatic multi-dealer quoting  Order execution Immediate orders Quote requests  Single-dealer  Multi-dealer Spread orders / conditional orders Multi asset trading Order management (working orders)  FI market generally does not do partial fills Pre-trade Trade Post-trade

4 Business drivers for using FIX Deepens product offerings from dealers  Standardizes and widens information flow to clients  Simplifies marketing of full product breadth Efficiency for dealers and clients  Integration with client and dealer trade workflow  Easy to show requests to multiple dealers  Batch trading  Simplifies control and measurement of allocation of flow to different dealers  Automation of allocations and other back-office processes New capabilities  Extremely fast response to execution orders  Integration of algorithmic trading models  Confirms and allocations  Seamless integration across asset classes STP  True end-to-end STP -eliminates double-entry of trades

5 Gaps & Issues Feeling that early adoption provides limited upside Streaming market data OMS systems not ready  Lead-time associated with vendor implementations  Client implementation of vendor upgrades Feedback pre- and post-execution to dealers  No information on how widely a quote has been distributed  Trade cover and best execution Exposes internal inefficiencies to the external world Older implementations for Fixed Income trading tend to modify earlier version of the protocol rather than upgrading to the latest versions

6 Current state of FIX for Fixed Income FIX 4.4 released in April 2003  First version with full Fixed Income trading functionality Multi-dealer offerings  Pre- and post-trade allocations  Confirmations  Multi-dealer trade execution feedback Single-dealer offerings  Indication of Interests  Allocations  Confirmations  Trade execution

7 Current state of FIX for Fixed Income (cont.) Order management systems  Increasing interest from order management systems to support FIX 4.4  A couple of the major systems are in beta testing  Majority of the leading order management systems will be 4.4 compatible Buy side  Indication of Interest  Upload of order book from OMS to trading application  Import of trade execution within OMS  Allocations: Pre & post trade Cheap FIX Engines availability  Quick FIX is publicly available and used by some institutions

8 JPMLink FIX—applications In House system (Client developed)  Provides clients with a direct, fast, and reliable way to execute trades  Target: Custom order management system or black-box trading engines  Particularly applicable if client already supports FIX OMS platform (Commercial)  Provides clients using with the ability to execute trades using their OMS  Easy integration for clients on OMS platforms that have been certified compatible Grey Label  Provides a highly reliable, fast, high-volume connection for a third party  Clients trading through the platform have FIX accounts (but not individual user IDs or GUI access) and settle trades vs. JPMorgan  Trading GUI, blotter, and market data screens provided by third party service White Label  Similar to previous, but no client information or trading accounts are provided  Back to back trading

9 IPSEC VPN over the internet Private IP network connection Direct Point-to-Point Leased Line Existing client connections to can be reused FIX router In House systems Grey label White label OMS platform Sys core FI OMS FX OMS JPMLink FIX architecture Connection options Direct API using industry standard FIX protocol FX Trading via FIX 4.3 & 4.4 Immediate and RFQ orders Spot and Forward Swaps FI Trading via FIX 4.4 Immediate outright orders RFQ SDP/MDP, Subject Order, Spread Trading Support for all “bond-like” instruments

10 Additional information is available upon request. Information herein is believed to be reliable but JPMorgan does not warrant its completeness or accuracy. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results. The investments and strategies discussed here may not be suitable for all investors; if you have any doubts you should consult your investment advisor. The investments discussed may fluctuate in price or value. Changes in rates of exchange may have an adverse effect on the value of investments. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. JPMorgan and/or its affiliates and employees may hold a position or act as market maker in the financial instruments of any issuer discussed herein or act as underwriter, placement agent, advisor or lender to such issuer. Copyright 2001 J.P. Morgan Chase & Co. All rights reserved. JPMorgan is the marketing name for J.P. Morgan Chase & Co., and its subsidiaries and affiliates worldwide. J.P. Morgan Securities Inc. (JPMSI), member of NYSE and SIPC. Morgan Guaranty Trust Company of New York and the Chase Manhattan Bank, members of FDIC. J.P. Morgan Securities Asia Pte Ltd., (JPMSA) and Chase Manhattan Asia Ltd., are regulated by the Hong Kong Securities & Futures Commission. JPMSA is regulated by the Monetary Authority of Singapore and the Financial Services Agency in Japan. J.P. Morgan Futures Inc., is a member of the NFA. Issued and approved for distribution in the UK and the European Economic Area by J.P. Morgan Securities Ltd., Chase Manhattan International Limited and J.P. Morgan plc, members of the London Stock Exchange and regulated by the FSA. Issued and distributed in Australia by Chase Securities Australia Limited and J.P. Morgan Australia Securities Limited which accept responsibility for its contents and are regulated by the Australian Securities and Investments Commission. J.P. Morgan Markets Australia Pty Ltd. is a licensed investment adviser and futures broker member of the Sydney Futures Exchange. Clients should contact analysts at and execute transactions through a JPMorgan entity in their home jurisdiction unless governing law permits otherwise.

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