Direct Market Access

When you execute a trade through your broker, you may not realise that it rarely happens directly on London Stock Exchange order books.

Instead, brokers have traditionally had to request prices from specialist market makers, known as Retail Service Providers (RSPs). These intermediaries offered prices in retail-size (relatively small) volumes and you could only trade at the price they provided.

However, more and more brokers are now offering a service called Direct Market Access (DMA), which allows you to place your orders directly on our order books in the same way that institutional investors do.

Useful links

Key advantages

Level playing field

Every order is of equal status on the order book, prioritised only in terms of price and time

Visibility

Orders are visible to the entire market, allowing all market participants a full contribution to central market liquidity

Depth of order book

The order book shows the number of buyers versus the number of sellers and at what price they are willing to trade

Set your own price

Limit orders can be entered at whatever price you choose and are available to the entire market

Tighter spreads

As limit orders are displayed publicly rather than held privately, market spreads become tighter. This benefits the order placer, giving them a better chance of getting executed at the right price; the market as a whole also benefits from a tighter public reference price to work from

Auction participation

You can participate in the pre-market and post-market auctions where the highest or lowest price often occurs

Peace of mind

Regulation and market supervision by the Exchange

Certainty

The order book is always available during trading hours.

Direct Market Access FAQs

  • General benefits of direct access and order book trading include the speed of execution and the potential for better pricing than investors may otherwise receive by using a third-party broker/dealer. This suggests that investment performance can be improved regardless of the number of trades per day, or per year.

    The ability to join the buyers and sellers order book columns can create opportunities to buy or sell well within the perceived spread, a potential cost saving on a transaction.

  • Limit orders left with brokers are not displayed publicly but merely poll RSPs when the price moves past the limit order - i.e. you are still paying the spread, it is just the spread that has moved. With DMA you get the opportunity to post your limit publicly for the entire market to interact with and you can buy at the bid or sell at the offer, thus making the spread for yourself. There is therefore an increased opportunity to trade at a better price through DMA.