Why DMA is important to liquidity?

As both brokers and end users seek to improve their speed of trade execution, the advancement of technology have driven the demand for new access arrangements such as DMA and co-location facilities.  

What is DMA? 

DMA refers to electronic facilities, often supplied by independent firms, which allow buy side firms to access liquidity for securities they may wish to buy or sell.  

Buy side firms are customers of sell side firms – brokerages and banks which may act as market makers in a security. Buy side firms will still use the trading infrastructure of sell side firms, but have more control over how the trade is executed.

Doo Clearing, a UK-based Spot Forex and CFDs liquidity provider facilitates DMA to one of the deepest available liquidity pools for Spot Forex and CFDs.  

Thus, it is timely that the DMA and its impact on trading activity are put to thorough scrutiny. We share the importance of DMA to liquidity here to parallel with user needs.   

Importance of DMA to Liquidity 

1) Wider Access to Sources of Liquidity 

A DMA platform seem a necessity for competition in dealing in liquid securities. If client connectivity is critical for the DMA provider, the attractiveness of DMA to the client is directly proportional to the breadth of markets that can be reached.  

Doo Clearing’s DMA liquidity paradigm is a comprehensive one-stop solution when executing simple or complex trading strategies. Doo Clearing’s strategy was specifically developed to create a transparent and low-latency trade execution venue that fund managers are drawn to its reliability, simplicity, and robustness.   

2) Depth of market  

Depth of market is a window that shows the number of open buys and sells orders for a security or currency at different prices. The depth of market measure provides an indication of the liquidity and depth for that particular security or currency. The higher the number of buy and sell orders at each price, the higher the depth of the market.   

Depth of market provides traders with an insight into volume and liquidity data. Traders can get a feel of the market sentiment. This knowledge can be invaluable when placing a trade. The data can be combined with other technical analysis charting tools to predict the direction that the market will take. 

It is a necessary prerequisite for any DMA users that their trading system can reliably sustain large volumes of data.  

3) Transparent Pricing Execution  

Doo Clearing offers algorithmic and high-frequency traders in the best trading environment. Our technology and pricing solutions ensure that traders experience all the benefits of an aggregative, low latency trading environment. Doo Clearing enables direct access to consistent, reliable interbank and non-bank price liquidity covering a wide range of instruments.  

4) Latency  

Spreads, latency, execution and all other factors are crucial to brokers or traders sourcing liquidity providers. 

Latency refers to the amount of time taken to electronically send or receive information. High frequency traders rely on very low latency (i.e. very quick data transmission) for their trading strategies.  

Doo Clearing is utilizes cutting-edge technology for liquidity aggregation. It allows traders to deal with only one company, and have their order automatically spread over multiple liquidity providers without having to deal with the liquidity providers directly. 

If you have any question regarding a liquidity bridge and are looking for an upgrade or optimized solution, contact a specialist today as we can accommodate all the liquidity and technology requirements.    

London Office    

Email: [email protected]   

Web: www.dooclearing.co.uk   

Hong Kong Office   

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