Question-81: What do you mean by Straight Through Processing in fixed income trading?

Answer: When you do any fixed income trade it requires pre and post processing of it and that is part of entire trade lifecycle. And this is automated since last many decades by the advent of Information technology. Which is known as Straight Through Processing (STP). Trade goes through various phases like clearance and settlement. This all phase requires almost same or enriched data. And that can be done using the automated process, without involving manual entry. That is all part of the STP. Following are the few examples which are being done as part of STP process in fixed income trade.

• Delivery of confirms trade.
• Account allocations to portfolio management systems
• Delivery of trade execution messages to back office
• Clearing for post-trade processing.
• Capture and documentation of regulatory and compliance requirements
• Risk management and monitoring.

When we compare with the legacy manual process, it gives various benefits like

• Increase volume processing
• No human data entry error
• More efficient processing

Question-82: What is the FIX (Financial Information Exchange)?

Answer: Financial Information Exchange (FIX) is a messaging standard to facilitates real-time electronic exchange of securities transactions. Which is adopted by equities, fixed income transactions. FIX helps in to connect and link various fixed income systems. FIX helps electronic trading to offer post-trade messaging services to support of their STP initiatives. However, some organization does not use FIX for post processing of trade internally and they use their own custom standards as well. You can imaging FIX is a standard format of the Fixed Income trade messages which can be shared among dealers and investors electronically, so that they can understand each other messages with standard way.

Question-83: Which all messages are handled by FIX today?

Answer: FIX handles a variety of messages necessary to conduct fixed income transactions like

• Transmission of orders
• Confirmation of trade executions
• Allows dealers to supply bid or offer information for fixed income securities.

Question-84: What is FINRA stand for?

Answer: Financial Industry Regulatory Authority

Question-85: What is SEC stands for?

Answer: the U.S. Securities & Exchange Commission