AMQP Launch Raises Question of Universal or Specific Standards

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The new Advanced Message Queuing Protocol suggests there are rationales for each of the multiple financial data standards currently in use

In this space a few weeks ago, it may have seemed like I was leaning toward or convinced of the notion that the financial industry has too many different messaging standards and protocols out there.

Skeptics may see the debut of yet another standard this week, Advanced Message Queuing Protocol (AMQP) version 1.0, as only adding to the glut. There is also the possibility, however, that each standard might have its purpose and place. While multiple standards might not make sense in other industries, for the financial industry, different protocols are needed to handle complex derivatives than for equities or fixed-income securities.

Speaking at AMQP's launch event, Hanno Klein, senior vice-president at Deutsche Börse, specified different purposes of different standards. "One has to be realistic about what we can do with standards and how fast we can change the community," he said. "We started in settlement with Swift, ISO 15022 and now 20022 messages. We do a lot with the FIX protocol – FIXML being XML syntax for FIX. FpML is more for the OTC space where it's about describing very complex products that are actually contracts between parties. We use FAST in market data for bulk data on order books, trades, reference data and the like for trading."

When it comes to identifying orders, and thus generating reference data, the identifications themselves can have different sources and purposes, Klein explained. "Exchanges are used to assigning an ID to an order that came in – the so-called system order ID," he said. "When the buy and sell sides work with FIX, it's a client order ID coming from the buy side, so the sender defines and identifies the order. This has an impact when one party wants to modify an order." To make that modification, the system order ID is needed, but that party might only have their client order ID.

Thus standards decision makers had to designate client order ID as the main identification. "It's about the customer," said Klein. "One has to be flexible... and try to move the standard forward and get things done that support specific requirements."

A good question to ask – one that Klein pointed the way to in his remarks – is whether the industry can come up with something like a universal electric power plug or outlet, that allows plugs constructed for any country's outlets to be used. Securities industry messaging standards aren't a mechanical system, though. How would one write a code or set of standards that include every one of the aforementioned formats and connect them seamlessly together? That sounds like a challenge, as well as a spur to a new vision for data management in the industry.

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