For financial market participants, the world is only becoming more complex by the day. Fast-moving events, new streams of data, the impact of both emerging and legacy technologies, and demanding regulatory regimes all make for a challenging environment for liquidity providers of every type and size.
Against this backdrop, market structure has been changing dramatically. Brokers’ commission fees have been under pressure for some time and that trend shows no sign of change, prompting traditional liquidity providers to step back.
Meanwhile, a new breed of providers, in the form of sophisticated Principal Trading Groups (PTGs), has been filling the liquidity void. But these firms, many of which are algo-driven, have particular requirements. Low latency is no longer a nice-to-have. It’s a given.
What all this adds up to is a simple proposition: There is increasing value to be found in a high-performance direct market access (DMA) platform that makes life easier for new liquidity providers by eliminating pain points, whilst at the same time allowing brokers to rapidly expand their own client reach with new lines of business at no additional cost.
PTGs need to be able to enter markets quickly and cost efficiently, with minimal fuss. Brokers need to be able to offer flexible sponsored access at a low cost with a rapid time to market. They are also looking for new revenue streams as commission fees dwindle due to the evolution of the market. And for all participants, there need to be sophisticated pre- and post-trade risk management, seamless integration, and scalability.
Vela’s DMA Platform has been designed specifically with this market environment in mind. Sponsored clients can be onboarded instantly, allowing them to enter new markets around the world. Risk controls can be set within the platform, whilst drop copies of trades can be sent to broker sponsors. PTGs can choose to use Vela’s front end or to integrate the platform within their systems via APIs. Clearing members using the platform benefit from a flexible framework for risk management, including global kill switches.
The platform is a fully hosted and managed service delivering normalised market data and order entry. Crucially, the platform is built for speed – both in terms of low latency and the time to market for new clients.
Given the vast number of PTGs and the diversity of the markets they trade in, this is a critical factor. It means participants can seize new opportunities and make swift decisions on entering new markets, without having to worry about large upfront costs or long lead times. For brokers, the platform means they can generate more client revenue without devoting IT resources.
The challenges as a result of recent world events have led large swathes of the marketplace to reconsider their business strategies. More than anything else, they have learned that they need the ability to pivot. In such a world, the value of a high-performance DMA platform that is flexible, cost-efficient, and pain-free becomes immediately clear.
Check out our DMA Broker video which illustrates how Vela can help the broker community support new lines of business for sponsored access with our DMA Platform…at zero integration costs.