At the recent FIX EMEA Trading Conference, discussions around market data standards brought the FIX Protocol and ISO 20022 into sharp focus. A notable concern raised by industry experts is the suitability of the ISO 20022 messaging framework for handling trading messages, particularly in the context of MiFID II transparency requirements.
Marc Berthoud, head of exchange data strategy at SIX Exchanges and co-chair of the FIX MMT technical committee, highlighted specific limitations within the ISO 20022 framework, noting: “The challenge is that there is this requirement of ISO 20022 to handle pre- and post-trade transparency under the revised RTS 1 and 2. Today, ISO 20022 messages are not suitable at all for low latency volume and message distribution.”
ISO 20022 is widely adopted in banking and global payments, serving as a broad financial messaging standard predominantly using XML-based messages. Its application in high-frequency trading environments, however, presents distinct limitations due to its verbosity and inherent latency.
In contrast, the FIX Market Model Typology (FIX MMT) provides a standard specifically designed for trading and reporting activities, particularly within equities and non-equities in Europe. Originating under the FESE (Federation of European Securities Exchanges) in 2011 and later transferred to the FIX Protocol Ltd Trust, FIX MMT has become the industry standard for regulatory trade reporting under MiFID II.
Berthoud further highlighted challenges regarding trade flag consistency across market participants, stating: “Different investment firms will have different interpretations of the same rules and will have different flags for very similar transactions.” The FIX MMT addresses this by offering standardised trade reporting scenarios, establishing clarity and consistency in regulatory reporting. He emphasised: “The FIX MMT data standard is an efficient operational solution to help the industry fulfil its trade flagging requirements as outlined in MiFID II RTS 1 and RTS 2.”
The FIX MMT Technical Committee is proactively evolving the standard, with version 5.0 currently under discussion to incorporate upcoming amendments resulting from the MiFIR review. These amendments involve specific adjustments such as the removal and introduction of flags aligning with both ESMA and FCA revisions. According to Matt Bumstead, product manager at Bloomberg and Co-Chair of the FIX MMT technical committee, the standard will “finalise MMT v5.0 as soon as regulatory requirements get validated by the EU.”
As FIX MMT continues to refine its approach to trade flagging and transparency, the operational challenges of ISO 20022 in the trading space become increasingly evident.
Berthoud reasserted the FIX Committee’s vision, noting: “We hope this will become an industry standard, potentially useful also for regulators, helping achieve greater harmonisation and better enforcement.”
The FIX MMT framework aims to simplify regulatory compliance, enhance transparency, and reduce inconsistencies across trade reporting practices. As regulators finalise guidance, market participants anticipate further developments with cautious optimism, recognising that standardised data and trade flagging methods are essential for efficient market functioning.
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