Direct market access

BoA Merrill launches broker-neutral, low-latency DMA in Japan

Bank of America Merrill Lynch (BoAML) has introduced a new low-latency direct market access (DMA) service that allows buy-side firms to choose between brokers to achieve cost-efficient connectivity across Japan’s exchanges.

Users of the new platform, which BoAML says is a first in Japan, will trade via a single third-party data centre, rather than connecting to multiple co-location services, selecting broker counterparties according to their exchange memberships. The firm claims that the hosted service will cut trading costs “while maintaining connectivity speeds on par with “ existing co-location platforms in Japan.

“In the past, clients looking for exceptionally low-latency were limited to co-locating at specific exchange data centres in Japan,” said Carrie Cheung, director of electronic trading for Asia-Pacific at Bank of America Merrill Lynch, pointing out that this added to costs because access has been typically limited to one market and one broker. “Third-party hosting allows clients to freely choose the most efficient markets and the best performing brokers from one location for a competitive price. Latency-sensitive strategies will benefit from our state-of-the-art direct access platform and allow trading at speeds very similar to those of exchange co-location.”

The new service, which was developed in conjunction with KVH, a provider of network and managed IT services, and market data provider ACTIV Financial Systems, can provide access to all Japanese exchanges through the member participants, including the Tokyo Stock Exchange’s new Arrowhead trading system, which is expected to attract greater volumes of high-frequency and low-latency trading to Japan. The BoAML platform also offers market data and execution access to markets outside of Japan, including derivatives exchanges.

“Traders who employ high-frequency strategies using cash and derivatives, be they futures or options, have shown huge interest,” said Mark Wheatley, managing director of electronic trading for Asia-Pacific and head of equities for Japan at the bank. “In today’s environment where clients are seeking to minimise counterparty risk by trading with multiple brokers, this solution makes even more sense. Users have complete freedom to choose which brokers to route through, all from one location and for a very competitive price.”