In November, CME Group will become the first futures exchange to require a tag on order messages that identifies the execution method—a major milestone in the industry’s efforts to standardize trading and reduce a persistent source of friction in brokerage settlement.
The move is the culmination of almost a decade of work by FIA and FIA Tech to create a standard set of codes to identify widely used methods for executing trades. Those methods range from fully automated algorithmic trading to human-to-human interaction over the telephone. Once these codes are added to order messages, clearing brokers will have visibility into how orders are executed. That is particularly important when clients use one firm for execution and another for clearing.