The DMA (Direct Market Access) is basically an electronic facility which is supplied by several independent firms. Direct Market trading lets the traders do business without the hassles of any broker. These are used majorly by the investors in order to enhance their trading control. This removes the middleman, however, not completely. The very first benefit of DMA trading is that it allows the businesses to trade within the spread. For example, if the price of a product is quoted in between 420-425 by the broker, it means that people can buy it at 425 but it can only be sold at 420. This difference of 5 points is termed as a spread. Hence, DMA (Direct Market Access) helps a company to deal within such spreads in order to ensure profits.
Few Benefits of DMA
There are a number of benefits of DMA which you, as a business owner, can enjoy. Here are some of them:
- It enhances visibility.
- It provides improved equality.
- It helps in prioritizing the orders as per the price and trade.
- It allows liquidity in the central markets.
- It provides small spreads.
- It allows a business to quote its own price.
- It helps the businessmen in participating in many auctions.
- It allows the traders to take part in the post-market auctions actively.
- It maintains the secrecy of the trading strategies.
- It promises a better execution of the trading strategies.
How DMA Works?
The working of DMA is varied. We all know that the stock exchange markets allow the buyers and sellers to interact only through the brokers. However, with the advent of the electronic trading systems, the stock exchange market witnessed a number of changes. Such systems actually reduced the need for face-to-face interaction and instead, helped the best buy orders directly match with the best sell orders automatically. However, online trading doesn’t usually involve any kind of manual interference, but it requires confirmation of the orders through the online trading system of the broker before reaching the trading system of the stock exchange.
DMA trading is a great way to take the usual stock exchange market trading to the next level. With its help, the various brokers can easily install the trading terminals to the trading systems with direct access to the stock exchange. Hence, it has become easier for the clients to place their orders without any kind of interventions by the broker.
DMA is indeed a great facility for the clients who can now order anything directly through the trading system. For the international stock markets, DMA has been quite popular. However, it is comparatively new in India. Hence, keeping all the above mentioned aspects in mind, it won’t be wrong to say that DMA or Direct Market Access is a way of enjoying much efficient and faster operations in the world’s stock exchange trading.