Direct market access explained

DMA or direct market access refers to a method by which electronic trading transactions which are sold, purchased, or submitted directly in the order book of stock exchanges. Even though it might seem to be a way which is obvious in trading, the DMA is a recent developed. Trading online at cfd trading South Africa is not the same as the DMA.

The DMA is done online but few traders can access it and utilize it. The traditional trading was a process which took quite a long time – from the decision made to buying or selling to the trade actually fall through.

An order will have to be placed with the trader or broker, either via the internet or phone. The broker asks for a quote for the order making with a market maker, who is a person or firm who the stock has requested and is willing to either buying or selling. The market maker then gives a bid price.

The work of the broker is to negotiate the terms which include the price, making a profit from it. all the steps taking time and the broker might charge a brokerage fees to the final client. The quotes are compared with the rest of the markets and it is up to the investor in making a choice. The opportunity does last a short while before the ask and the bid price start to fluctuate. With the fluctuations, the spots do change.

Referred to as the market that is quote-driven, they were standard till efficient, faster and less reliant to process of middlemen got introduced. The markets got dominated by the trade which made the hose which fixed the price and the small time investor got forced to be satisfied with the returns that followed.

Direct market access

Electronic trading and the move in the stock exchange online did allow the quote driven market movement to the system of order-driven. The exchange on itself has an order list which the trader can place directly the order where the price range is agreed.

The orders do remain on the list until the criteria which are set are met. The control level and the convenience can also be the reason as to why not all the markets are ready into moving to utilize the method of DMA. There need to be liquidity – with a lot of people wanting to sell and buy stock at the same time, which might not always be possible.

The way the DMA worked

It is mostly only available to investors’ institution, DMA accounts gets you various levels of the liquidity which is displayed in real time. You will view the available pricing on whatever side of your order book and have the ability to executive orders from the spreads top. It is what will allow you in gaining exposure to the pools which are deep of liquidity with transparent, straightforward pricing from the providers that are leading in the market and thus, embrace it.