Direct market access (DMA)


    Direct market access (DMA) enables traders to submit buy or sell orders directly to the order book of an exchange.

    Traditionally, trading directly with the order book was only available to broker-dealers and market makers, but DMA enables private firms and investors to directly interact with the order book. This service is also available by some online retail brokers.

    Visit our broker page to find out which of our advertising brokers offers direct market access:

    How is DMA different from traditional trading?

    In the traditional method of placing a trade, your broker requests quotes from market makers and then presents the best quote, and therefore a single price, at any one time. You can then decide whether or not to accept it.

    However, DMA allows you to see different prices of different orders and place your own order accordingly, bypassing intermediaries. Trading in this way creates a number of advantages.

    Advantages of DMA

    Bypassing intermediaries can mean faster execution of transactions and lower associated costs.

    DMA also gives you greater control as a trader, because instead of accepting a quote from a broker, you are now making an offer and managing the transaction yourself. This means that you place orders at the price you would like to get filled at and then wait for your order to be accepted.

    Market liquidity, however, ultimately influences the price at which an order is filled, because you have to wait for a counterparty to accept it.

    There are a number of other advantages to using DMA, including:

    • You can usually achieve a slightly better price for your order since there is no market maker involved to take a cut.
    • Transaction fees are generally lower because you are only paying to use the broker’s technology rather than paying for order management services.
    • Because no intermediary is involved in placing the trade, DMA also offers greater anonymity.

    Despite these advantages, the savings with DMA are relatively small and will be of most benefit to particularly active traders.

    Not all brokers offer DMA and those that do may require a higher minimum account balance.