04 April 2022
As a broker offering prime services, we have many clients wishing to deal directly with the market. This type of trade execution service is known as Direct Market Access (DMA) and is available to eligible established clients. So what are the pros and cons of electronic trading?
There are numerous pros and cons with regards to electronic trading, with some of the more prominent pros including:-
Latency is the measure of time between passing an instruction and the instruction being executed. Obviously, day traders and those who trade regularly require their trade execution orders to be completed as soon as possible. As a company, we are continually investing in our technology infrastructure to support and promote low latency execution-only services.
Under the DMA system, eligible clients can access markets directly, which means they can monitor order books and general market movements before dealing. Timing is obviously of the essence when looking at best trade execution. There is no better way to transact than direct with market order books.
Before the electronic trading revolution, several parties would have been involved in passing, receiving and executing client orders. The onset of low touch execution has removed many of these parties and the associated time delays. This places more control in the hands of a trader, allowing them to respond to market movements much quicker.
We provide Direct Market Access for eligible traders and direct access to client accounts. This high degree of transparency means that clients can log onto their account at any time, check movements, safe custody, and the progress of their latest trades. While often taken for granted, electronic trading and additional services have changed the landscape of investment.
Some of the cons associated with electronic trading include:-
Here at GIS UK Ltd, we have many clients who deal on an execution-only basis. This means that they received no advice from our company regarding their investment ideas or trade execution. Even though access to research online has never been greater, you can’t beat good old-fashioned local knowledge. We have that in abundance via our helpdesk colleagues.
Trade execution can be challenging in fast-moving markets where those using electronic services have no direct access to physical market participants. Our colleagues have years of experience across numerous markets, many previously with tier-1 financial institutions. As a result, they can assist when markets are challenging and use their expertise to complete potentially complicated trades.
While liquidity issues can become a problem in fast-moving markets, some stocks lack genuine liquidity and dealing in size can be challenging any time. But, again, this is an area where our colleagues have experience, market contacts and a deep-seated understanding of local and global markets. As time is often of the essence, those looking to deal in significant size may benefit from a controlled, structured approach.
GIS UK Ltd is continually investing in new technology, new trading platforms and the array of online services we offer. However, third-party technology issues may impact those who decide to trade electronically, affecting their trading performance. Thankfully, we have a backup in the shape of our 24-hour/5 days a week helpdesk where telephone trading is available.
There is no doubt that electronic trading is more compatible with those looking at execution-only services rather than investment advice. Our DMA system allows clients to access markets directly, monitoring order books and waiting for that opportune moment to deal. Low latency execution services are essential, low touch execution a must, but ultimately it is trade execution and support services that keep our customers coming back time and time again.
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