Definition
Direct Market Access (DMA)
Direct Market Access lets institutional clients route orders straight to the exchange order book using a broker's infrastructure and exchange membership, without manual broker intervention on each order.
SEBI permitted DMA in India in 2008, initially for institutional investors. The order still flows through the broker's risk-management filters and uses the broker's exchange connection, but the client controls order placement directly, often through their own or a vendor trading system. This reduces latency and information leakage compared with phoning a dealer.
DMA is the foundation for institutional algorithmic trading and execution algos. The broker retains responsibility for pre-trade risk checks, exposure limits and compliance, since the orders are placed under the broker's trading code. Sponsored access, a faster variant common abroad, is more tightly restricted in India.
Related terms
- Algorithmic TradingAlgorithmic trading is the use of computer programs that follow pre-defined rules on price, timing, quantity and other variables to place and manage orders automatically, with little or no human intervention per order.
- Execution AlgorithmAn execution algorithm is a program that works a large parent order into many smaller child orders over time to minimise market impact and achieve a target benchmark such as VWAP or the arrival price.
- FIX ProtocolFIX (Financial Information eXchange) is a standardised electronic messaging protocol used globally for the real-time exchange of securities order, execution and market-data messages between trading parties.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.