Research firm Celent estimates that direct market access (DMA) trades will account for 11% total trade flow in India by 2010, following the introduction of DMA in the country in April this year.
In a new report, titled ‘The Impact of Direct Market Access in India’, Celent noted that in Europe and the US, pure DMA flows have risen to between 15 and 18%. The firm believes that this success will be carried over to the Indian markets. Trading value on the cash market in India has grown at a compound annual growth rate of around 67% since 2005, reaching $1.2 trillion in 2007. Some 242 billion shares were traded in the Indian exchange-traded market in 2007.
“Conditions in the market, especially some key market inefficiencies at the brokers’ end, are ripe for the adoption and usage of DMA channels,” said Sandeep Hebbar, senior analyst with Celent’s Banking group and author of the report, in a statement. “Major brokerage houses are in a race with each other to enhance their trading systems and be among the first to offer these services.”
Celent noted that the introduction of DMA for institutional investors in India reflects the nation’s move towards a more efficient and technologically capable trading infrastructure.
DMA is a low touch execution method, which allows investors to access markets with minimal input from a broker. Buy-side firms therefore have greater control over trades, faster and better quality of execution, facilitation of complex trading strategies and lowered brokerage fees.