Will REST/ WebSocket Take Over FIX?
06 October 2023
In recent years, fintech has evolved significantly, driven by innovative solutions. Banks, institutions, and trading platforms are adopting modern data delivery methods.
This article explores whether REST and WebSocket could replace FIX or if they'll coexist and complement each other. Stay tuned for insights on these data delivery mechanisms and future trends in web services and applications.
Understanding Data Delivery Methods
Let's have a quick recap of how REST and WebSockets operate:
REST (Representational State Transfer) API adheres to design principles for constructing web services that utilize the HTTP protocol, primarily for unidirectional, request-response interactions. In this setup, users "pull" Forex data by submitting a request and receiving a relevant response. REST API is ideal for workflows with limited latency, frequency, and data loads.
Also Read: WebSockets Vs REST
WebSockets (can be REST, usually aren't) enable bidirectional communication between clients and servers through TCP sockets. With a single request, a connection is established, and data is continuously "pushed." This method shines when every millisecond of tick data matters. It can handle substantial data loads, providing hundreds of real-time tick rates per minute.
Also Read: Push Vs Pull Forex Data
Now, let's delve into FIX. The Financial Information eXchange (FIX) is a scalable electronic communication protocol widely favored for B2B communication. It's the preferred choice for banks, financial institutions, and institutional-grade traders.
FIX excels in pre-trade, trading, and post-trade interactions. It enables real-time Forex data retrieval with minimal manual effort and cost. Developers and fintech firms benefit from multi-channeling, ensuring reliable data for improved service quality and performance.
The Magic of FIX
Since its inception in 1992, the FIX protocol has been a vital tool for conveying internal and external data, including order execution, trade confirmations, and more. It offers a mature dictionary of messages and tags, with the latest version providing 27 message types.
FIX is widely used by buy-side institutions, sell-side brokers-dealers, and various financial markets beyond Forex. It's employed in stock exchanges, investment banks, brokers, mutual funds, and ECNs. Developers find it versatile for creating comprehensive workflows and trading assets, making FIX a cornerstone in traditional banking and finance.
It's the go-to communication mode for sharing trade and price information within the financial trade community. Its seamless integration with networking technologies ensures its ubiquity across various workflow processes, from order initiation to settlement.
Challenges in Implementing the FIX Protocol
Integrating REST and WebSocket into FIX is a challenging, uncharted journey. It involves mapping existing workflows to find suitable FIX messages, relying on industry practices and customer expectations, requiring substantial experience.
Getting it right initially is crucial, as reengineering can disrupt customers. Engaging FIX experts early in the implementation process is advisable. The complexity of FIX often requires specialized teams within large institutions, putting some Forex trading venues at a disadvantage.
Nonetheless, the benefits are clear. Offering a FIX API helps institutions extend liquidity algorithms. Trading platforms with FIX connectivity gain an edge, attracting larger institutions and expanding market share.
Comparing WebSockets with FIX
WebSocket and FIX serve different purposes in financial trading and communication. While both have strengths and weaknesses, it's not about one being better; it depends on specific use case requirements. Let's compare their characteristics and use cases.
Real-Time vs. Batch Processing
WebSocket excels in real-time, low-latency data streaming for immediate updates and interactivity. FIX Protocol is mainly for batch-oriented, non-continuous communication, often used for order execution and trade confirmation.
WebSocket offers flexibility with no specific format, accommodating JSON, XML, or binary data. FIX Protocol provides a standardized and structured messaging format optimized for trading with predefined fields.
WebSocket supports full bi-directional communication, allowing independent messaging between client and server, suitable for immediate responses. FIX Protocol is typically unidirectional, with clients sending requests and servers responding, though it can be adapted for bi-directional use.
Adoption and Ecosystem
WebSocket is versatile and used in diverse industries like web apps, gaming, and IoT, with a broad developer community and extensive toolsets. FIX Protocol is industry-specific, a long-standing standard for financial trading, with a well-established ecosystem and strong support from financial institutions.
WebSocket and FIX protocol have distinct strengths for financial trading and communication. WebSocket is ideal for real-time data streaming and interactivity, while FIX excels in standardized, batch-oriented communication for transaction-related processes. The choice depends on specific application needs.
In short, if you are a financial company and or dependent on legacy systems, and if you wish to avoid FIX implementation due to its complexity and expertise dependence, WebSockets could be an excellent alternative for real-time communication and data retrieval.
An Ultimate Cocktail: Technologies To Go Hand-in-Hand
FIX and SWIFT are historical protocols, while REST and WebSockets are preferred for market data. Traditional finance adds REST/WebSockets to FIX, and modern platforms add FIX. REST lacks real-time, yet WebSockets adds that feature. FIX is reliable but complex. So, the modern finance services sector seeks hybrid models combining FIX's reliability with REST/WebSockets' precision.
The Final Thoughts
This article has provided an in-depth exploration of significant data delivery methods. In the context of Forex data, it is clear that REST/ WebSockets may not entirely supplant FIX, as each offers unique benefits that cater to the specific needs of data users. Yet, WebSockets are a practically feasible solution for your real-time needs.
Choosing TraderMade as your Forex data partner empowers you to adopt the necessary data delivery methods tailored to your technology requirements. This, in turn, enables you to enhance your websites, applications, and solutions with data retrieval features that align with users' preferences.