In global securities trading, the term direct market access (DMA) refers to the complex of networking, routing and software facilities that allow buy- side firms to cost-effectively execute transactions via regional and global trading venues.
DMA services enable buy-side firms to send orders to exchanges and other trading venues via the memberships and trading infrastructure of sell side firms and other providers of trading systems and services. Although a third party is involved, the DMA process generally allows buy-side firms to exert a great deal of control over how their trades are executed.
The DMA process can help buy-side firms trade faster and at a lower cost while mitigating errors via automation. They can also sidestep the creation of an IT infrastructure and network links to multiple trading venues. DMA also minimizes information leakage because all trades are conducted anonymously using the DMA provider’s identity as a form of cover.
More recently, DMA has been combined with algorithmic trading, which is a rules-based trading that governs venue selection, order execution, timing and volume. The combination of DMA and algorithmic trading technologies has fostered the development of multiple trading strategies.