Saturday, January 18, 2020

Trading in UK as private Investor- Direct Market Access (DMA)

Direct Market Access (DMA) enables private investors to place buy and sell orders directly on our order books and trade like market professionals.

Direct Market Access (DMA) is a service offered by some stockbrokers that enables sophisticated private investors to place buy and sell orders directly on the London Stock Exchange order books. With DMA private investors can level the playing field and trade like market professionals. 

Traditionally a broker has sent an investor's order to a specialist market maker known as Retail Service Provider (RSP), however DMA now provides you with a choice. DMA allows you to take greater control of your trades by using a broker to place your orders directly on the central market along with all the other market participants. A relatively new service for investors in the U.K. but a benefit which has been enjoyed by investors for sometime in other major markets around the world.
The key benefits of DMA include:
  • Equal 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 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 will be available to the entire market.
  • Tighter spreads: As limit orders are displayed publicly rather than held privately, market spreads become tighter, benefiting the order placer, who has a higher chance of getting executed at the price and the market as a whole which has 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.

To start trading via DMA you will need to set up an account with one of the available DMA provider.
DMA providers
To start trading via DMA you will need to set up an account with one of the DMA providers below. In addition, your chosen broker will be able to advise you on Level 1 and Level 2 data and how to subscribe to them.
Currently brokers offer Cash and CFD (Contract for Difference) services.
IG Markets**
Interactive Brokers**
Background to trading
Gain a better understanding of the differences between non-order book trading and order book trading.
Non-order book trading
Private investors trade shares through stockbrokers. Brokers typically request prices from a number of market makers called RSPs who offer prices in “retail” (relatively small) sized volumes.
The price supplied to you by a broker is the best price they have been quoted by the RSPs they deal with. These, in turn, are based on the price available on the London Stock Exchange’s order books. Traditionally, you can only trade via your broker at the price supplied by an RSP and unexecuted limit orders are warehoused by the broker and not displayed to the entire market.
Order book trading
While stockbrokers typically execute trades through the RSP network, the majority of institutional trading takes place on the Exchange’s order books. Larger securities trade on order books which electronically match buyers and sellers.
An increasing number of brokers now offer DMA, which enables you to enter your own orders directly onto the order book without the need for an RSP intermediary. This provides the opportunity to:
  • trade in larger sizes than typically available from RSPs
  • set your own price rather than simply take the price offered by the RSP
  • display unexecuted limit orders to the entire market
Level 2 market data
Level 2 market data provides the most comprehensive and in depth set of data available on trading activity. Learn about level 2 market data in order to trade more effectively via DMA.

Click here to download a copy of the 'Guide to Level 2 Market Data'. 

Thursday, June 25, 2015

How to do trading in UK

Here is a wide range of broker services available. Some offer bespoke services and tailored advice, such as Charles Stanley, Redmayne Bentley and Killik & Co, whereas others are nothing more than execution-only share dealing services.
These are online platforms through which a client can buy and sell shares independently through a share dealing account, without being offered advice.
Examples of these include Interactive Investor, Hargreaves Lansdown or The Share Centre.
For beginners who want to be more involved and dabble with individual shares, it makes sense to open an online, execution-only share dealing account which keeps the cost of investing to a minimum,

Tuesday, May 19, 2015

Gold Monetization Schem -Draft Guidelines

The below snap shot will give  a brief overview of the Gold Monetization Scheme proposed in the 2015-16 budget.

Below is the process suggested for monetizing gold
  1. Preliminary Test: 
    1.  In a Purity Testing Centre, a preliminary XRF machine-test will be conducted to tell the customer the approximate amount of pure gold.
    2. If the customer agrees, he will have to fill-up a Bank/KYC form and give his consent for melting the gold. 
    3. If the customer does not agree to the XRF machine test, he can take his jewellery back at this stage.
  2. Fire Assay Test: 
    1. After receiving the customer’s consent for melting the gold for conducting a further test of purity, at the same collection centre, the gold ornament will then be cleaned of its dirt, studs, meena etc. 
    2. The studs will be handed-over to the customer there itself. Net weight of the jewellery will be taken after such removals and told to the customer.
    3. Then, right in front of the customer the jewellery will be melted and through a fire assay, its purity will be ascertained. 
    4. These centres have viewing galleries from where the customer can see the entire process. The time taken is expected not to exceed 3-4 hours.
  3. Deposit of Gold:
    1. When the results of the fire assay are told to the customer, he has a choice of either refusing to accept, in which case he can take back the melted gold in the form of gold bars, after paying a nominal fee1 to that centre; or he may agree to deposit his gold (in which case the fee will be paid by the bank). 
    2. If the customer agrees to deposit the gold, then he will be given a certificate by the collection centre certifying the amount and purity of the deposited gold
  • Gold Savings Account: 
    • When the customer produces the certificate of gold deposited at the Purity Testing Centre, the bank will in turn open a ‘Gold Savings Account’ for the customer and credit the ‘quantity’ of gold into the customer’s account. Simultaneously, the Purity Verification Centre will also inform the bank about the deposit made. 
    • Interest payment by banks:  The bank will commit to paying an interest to the customer which will be payable after 30/60 days of opening of the Gold Savings Account. The amount of interest rate to be given is proposed to be left to the banks to decide. Both principal and interest to be paid to the depositors of gold, will be ‘valued’ in gold. For example if a customer deposits 100 gms of gold and gets 1 per cent interest, then, on maturity he has a credit of 101 gms. 
    • Redemption:  The customer will have the option of redemption either in cash or in gold, which will have to be exercised in the beginning itself (that is, at the time of making the deposit). 
    • Tenure:  The tenure of the deposit will be minimum 1 year and with a roll out in multiples of one year. Like a fixed deposit, breaking of lockin period will be allowed. 
    • Tax Exemption: Transfer of Gold to the Refiners In the Gold Deposit Scheme (1999), the customers received exemption from Capital Gains Tax, Wealth tax and Income Tax. Similar tax exemptions are likely to be made available to the customers in the GMS after due examination
More information can be found at Gold Monetization Scheme

Monday, September 22, 2014

Open Interest and Volume Relation

Here are some general guidelines on how the interaction of price and volume/open interest might affect value:

  • if both parties to the trade are initiating a new position ( one new buyer and one new seller), open interest will increase by one contract. 
  • If both traders are closing an existing or old position ( one old buyer and one old seller) open interest will decline by one contract. 
  • The third and final possibility is one old trader passing off his position to a new trader ( one old buyer sells to one new buyer). In this case the open interest will not change. 
  • By monitoring the changes in the open interest figures at the end of each trading day, some conclusions about the days activity can be drawn.
  •  Increasing open interest means that new money is flowing into the marketplace. The result will be that the present trend ( up, down or sideways) will continue. 
  • Declining open interest means that the market is liquidating and implies that the prevailing price trend is coming to an end.
  •  A knowledge of open interest can prove useful toward the end of major market moves. 
  • A levelling off of steadily increasing open interest following a sustained price advance is often an early warning of the end to an uptrending or bull market.
  • Price up, volume up, open interest up - bullish as it indicates traders still want to buy despite the higher price.
  • Price down, volume up, open interest up - bearish as increasing volume is driving the market lower.
  • Price up, volume down, open interest down - reduced buying interest and a possible market top.
  • Price down, volume down, open interest down - decreased selling interest at lower prices, indicating a bottom may be in place.

Open Interest
Market is Strong
Market is Weakening
Market is Weak
Market is Strengthening

Thursday, August 7, 2014

I am back from long break

Its been long time since a posted on this blog and happy that am blogging again.
Now that am back i am still thinking on what to start with.
As of now nothing seems to be coming to my mind. but am happy that i posted this blog and hope very soon i will blog here to update my knowledge and also readers knowledge :)  if at all any readers to my blog