Article below captured from N2N brochure
WHAT IS DMA?
Direct Market Access (DMA) is an electronic facility that allows you to directly access
liquidity for financial securities and multiple execution venues directly without the intervention of brokers. DMA enables users to enter their orders on a screen display and have their orders sent directly to the exchange.
WHY SHOUD I CHOOSE DMA?
As of 2008, studies show, almost 38% of buy side equity shares are executed through DMA and s still growing. Though still in its infancy stages, more and more high volume traders are rapidly adopting DMA as a method to agreegate liquidity, AmInvestment now offers you the opportunity to trade in deriviates via DMA and by end of 2009, equities as well. The time saved with DMA gives the critical edge needed for user in today's electronic age. The next frontier would be to expand DMA connectivitiy into the international market.
BENEFITS OF DMA
- DMA offers lower transactions cost.
- DMA orders are not executed by brokers; instead are sent directly to the exchange so there is less chance of error or execution irregularities.
- Traders are able to take advantage of very short lived market opportunities with swift order executions via DMA.
DMA For Future Market
What is Direct Market Access (DMA)
As the name suggests, using DMA, and entity can trade directly in an exchange - just likes brokers do. There is no need to place an order through a broker.
Advantages of Direct Market Access (DMA)
Speed
The main advantage of DMA in that it results in faster order placement and execution.
Till now, the institutions had to convey their orders to a broker, and the broker would place the orders. This means that the same information had to be conveyed twice, which resulted in delays, and, at times, errors.
Now, with Direct Market Access, the institutions would be able to place the orders directly in the market.
Cost Saving
Cutting down an intermediary would result in significant cost savings for the institutions.
Enable Algorithmic Trading
Since the institutions would be allowed to access the market directly, they can now develop and deploy computers running complex mathematical algorithms, which would place buy and sell orders automatically.
This would be a totally new avenue, and in the future, even mutual funds specializing in algorithmic trading can be introduced.
