Can you explore the work behind this milestone and why you were both eager to be involved?
Yuri Brightly: We took our existing securities finance applications and married them with our equity trading group’s applications, specifically the FIX engine itself. The largest part of the build was a bridge between the two applications. It included field mapping and application connectivity. We leveraged the existing equity infrastructure, the FIX engine, which is very common and known for easy connectivity onboarding, to be able to reach State Street. The FIX engine, Fidelity’s securities lending and needs application, were already there — it was bridging these two worlds.
Nathaniel Lindsay: State Street’s Agency Lending team had been exploring the FIX Protocol for some time and recognised the value of an open, community-led standard for exchanging securities lending trading information electronically. When Yuri and the Fidelity team helped reinvigorate the FIX Trading Community’s Securities Lending Working Group, we immediately saw an opportunity to collaborate. We were eager to contribute our expertise to the discussions and turn that engagement into a productive partnership.
From a technology perspective, exposing a FIX API was a natural extension of our existing Agency Lending Borrower Portal, a part of our Financing Hub. Our portal, launched in 2024, enables approved agency lending borrowers to communicate indications of interest and firm demand directly to our automated trading platform via LINK — our smart-desktop application — or programmatically using a standard REST API and now, using FIX.
What was the importance of putting FIX into production and what does it tell us about the evolution of, and attitudes towards, electronic trading?
Brightly: When we were looking at additional routes to the market, improving connectivity, to enhance or improve market resiliency and ultimately promote innovation, we took a look around and thought we cannot be the only group that has looked at these questions, especially in capital markets.
We looked at various different options and talked to our equity trading group, who were surprised we were not already using FIX. The more we discussed with them, it just made sense. FIX has a 30-year proven track record. The equities’ infrastructure is known for very low latency and high connectivity. To that point, this was not something new, we did not have to hire and train other people. Ultimately, we believe that FIX will reduce integration costs over the long term as FIX is an open standard protocol that anyone can use.
Lindsay: The milestone demonstrates that securities lending can support standardised, machine-to-machine execution using a protocol that is already deeply embedded across the cash market segments that our industry underpins, such as equities and fixed income. Importantly, this achievement is much larger than State Street or Fidelity; it validates the phenomenal progress that the FIX Trading Community and its participants have helped shape in the past several months.
Our primary goal is to sustain the momentum and broaden adoption — not only among market participants who are interested in building point-to-point connectivity, such as Fidelity and State Street — but also across emergent and incumbent trading venues who will benefit from the friction reduction that the FIX Protocol provides. The protocol is an accelerant to any form of communication, whether between two firms’ systems or with a venue. At State Street, we believe both models have an important role to play in securities lending’s evolving market microstructure.
More broadly, this mile marker reflects how electronic trading is evolving in the securities lending industry and broader financing markets. The question is no longer whether securities lending should become electronic; much of the market already is, and further adoption is inevitable. The focus now is on how we grow electronic trading through common standards rather than fragmented, siloed solutions.
In terms of this approach to make easier the ability to connect electronically, how can open standards improve connectivity, efficiency, and liquidity across the market?
Brightly: One of the barriers in general is cost and adoption. FIX is an existing 30-year solution that all firms use. The FIX Protocol is open-source, there are even open-source FIX engines. That is making it easier, from conceptual adoption. It is not doing something different, it is doing what your firm already does but for securities lending.
To that point, it reduces the potential fear for example, if there are many bespoke protocols to choose from out there, and it is expensive for firms to build to say 10, how do they know that the one they picked is going to be the one that is taken up and gains adoption? So it is not only beneficial for firms, but for vendors as well, it removes this fear barrier of ‘oh geez what if I pick the wrong one?’
Lindsay: Without a common standard, every integration on the trading desk — whether to a venue or directly with another market participant — becomes its own, separate technology project. Firms must reinterpret data elements, adopt new workflows, and tediously translate or map external data models into their own, requiring significant time and resources. As Yuri noted, that creates a substantial opportunity cost each time a firm connects to a venue or another participant directly.
I would like to see the FIX Protocol commoditise connectivity, and allow individual firms and vendors to compete on pricing economics, the breadth and depth of liquidity, platform functionality, and client experience. Connectivity should be ‘plug and play’, allowing the industry to move the conversation further up the stack and focus on more meaningful sources of differentiation as we determine the right mix of electronic routes-to-market.
Standardisation does not create liquidity on its own, but it can make liquidity easier to discover and access by reducing friction between participants seeking to interact electronically. From a State Street lens, we see the FIX Protocol as fuel for our vision to be the most connected, seamless, and intelligent lender in the marketplace and to leverage technology-enhanced solutions to better mobilise our clients’ assets.
Do you believe securities lending, historically, has lagged behind other markets in terms of technology adoption? If so, why do you think that is?
Brightly: Securities lending is still very electronic, but it has room to grow. It is ultimately a natural evolution that securities lending would take the success roadmap that exists in equities — which is hyper electronic, low latency, incredibly scalable — and then port that into securities lending. Securities lending has always been the add-on to trading and settlement. This next evolution is just the natural move forward.
Lindsay: In some respects, securities lending is a by-product of markets such as cash equities and fixed income. For example, the need to borrow via the securities lending market often arises from a requirement to settle a short sale executed in the cash markets. Because of the inherently second-order nature of securities lending and other financing markets, it has historically been the last domino to fall in terms of technological revolution.
The market also developed as an uncleared, relationship-driven ecosystem, without many of the structural forces that accelerated electronification in cash equities. Central clearing, for example, reduces the need to manage bilateral counterparty risk and supports standardised structures such as limit order books and electronic communication networks. Securities lending has not benefited from those same catalysts.
Securities lending, I would argue, is also inherently more complex than a cash market transaction. An outright purchase or sale typically involves only a handful of variables, such as price, quantity, direction, and security. A securities loan includes those same variables but must also account for collateral schedule, term, dividend requirement, counterparty, and recall likelihood, plus lifecycle events that continue well beyond execution. As a result, securities loans are less standardised and have been more difficult to automate.
What key obstacles need to be tackled, or core aspects can contribute to reshaping connectivity across securities finance for the better?
Lindsay: The next challenge is to maintain momentum and expand adoption of the FIX Protocol as the industry modernises around common standards for electronic trading.
Adoption must grow across both direct connections and trading venues. When State Street evaluates a securities finance venue, our first question is: do you support the FIX Protocol? We want to avoid costly mapping, translation, and integration work simply to test another route to market. As the ecosystem diversifies, standardised connectivity will help us distribute clients’ assets more effectively and advance our goal of being the market’s most connected and seamless lender.
Education is another hurdle. Many participants still perceive the FIX Protocol as a vendor, venue, or platform, but it is simply an infrastructure-neutral standard that defines a common data model for trades, quotes, orders, and other trading-related information. By defining these concepts, it simplifies integration to venues, counterparties, and proprietary channels by unifying communication within a common language.
Looking forward, what could this milestone signal for the future of securities lending?
Brightly: Over a longer time horizon, it is going to allow all firms, all vendors to have lower integration costs, which means they can spend money on other innovative things. It is going to hopefully improve market resiliency by having different routes to market: some direct, and some across vendors. Securities lending is an ever growing important part of capital markets and market resiliency is very important. Common open protocols should improve the ability to get to all aspects of demand and supply, as opposed to if we have 10 different bespoke protocols, whereby the odds that you can integrate to each of those efficiently or at all is diminished.
You do not have to be a FIX member to use FIX Protocol. There are a number of firms that are actively building to FIX and will be on by the end of the year, there are some firms that are building and they will be live in Q1 2027. And then there are other firms that are still on the earlier onset; they are doing their analysis. I have not come across a firm that said they did not want to do this. It is just a matter of planning and resourcing. So we are seeing a lot of positive momentum. Additionally, many vendors have taken this up as one of the solutions and see the benefits that FIX brings.
Lindsay: I see this milestone as another step along the same path followed by other markets over recent decades. In cash equities, FX and, more recently, fixed income, greater standardisation and connectivity have enabled new trading models, more sophisticated analytics, deeper automation, and new ways to access liquidity. Securities finance is now progressing through the same evolution.
Over time, the distinction between electronic and voice trading will largely disappear, although not every trade will be automated. Automated trading is a subset of electronic trading. Traders can still manage complex, high-touch flow through a platform or proprietary channel, but capture the negotiated agreement as a shared digital record that feeds both firms’ systems through straight-through processing. That is more efficient and reduces the operational risk created when trades agreed by voice or chat must be rekeyed separately.
This milestone will accelerate the shift towards ubiquitous electronic trading: some activity will be automated through algorithms, while higher-touch transactions will remain human trader-led, with technology augmenting judgement and execution — traders will become bionic.
Image: stock.adobe.com/treety 
