FIX Releases Version 1.0 of Simple Binary Message Encoding

Advancements in the speed of hardware, software and network connections prompted FIX to examine the current version of the FIX Protocol (the electronic communications protocol for real-time exchange of information related to the securities transactions) and address how the requirements for new financial applications such as high-frequency trading and market data can be met.

"FIX is a protocol which has been out there for twenty years now, which used the best technology of twenty years ago. The representation of messages on the wire was using character based representation, but that's not what computers use internally. They use binary numbers," says Don Mendelson, chair of the FIX Simple Binary Encoding subgroup.

The motivation for creating the SBE standard was to support high performance trading, Mendelson says, although the technology is also being used to deliver low latency market data. "For high performance trading what you want to do is take out any unnecessary steps and computing and just strip it down to the bare essentials. That's really what we did for SBE in terms of the encoding of messages on the wire."

The SBE project began four years ago, and there have been four release candidates before the final draft standard was published on June 30. Many of the discussions in the build up to the final publication were centred on how to tie the representation of messages on the wire back up to the application layer.

"FIX already defines various entities; we call them FIX data types. They're things like a price, and then an amount, and there are a lot of date and time data types. We had to come up with representations in this binary format for all the traditional FIX data types," Mendelson says. 

Often, firms have to translate from one format to another which requires a translator between SBE and the traditional tag=value encoding or other encodings or even other protocols. "For example you may have prices in market data that are distributed with this very high performance encoding, but they have to convert it for human readability, for reporting, for example. We had to create these common concepts - these FIX data types. The FIX message structures were then mapped to this and that gives the application layer view of things."

SBE already has early adoption from CME who is using it with its Group Globex Market Data interfaces, and the Moscow Exchange who is using it for derivatives market data and order entry. Going forward, FIX will target anyone who's involved in the high performance trading space as it seeks wider adoption, Mendelson adds.