What is direct access trading?

Direct access trading systems allow traders to trade stock (or virtually any other financial instrument) directly with a market maker or specialist on the floor of the exchange, or immediate order execution. The system cuts out the need for a middle person, which you'll typically find in an online brokerage.

What are direct access brokers?

Direct access brokers are specialized brokerage firms that allow traders to directly route their orders to specific exchanges, electronic communication networks (ECNs), and market makers. These brokers provide advanced trading tools that are optimized for execution and speed.

How do direct access orders work?

Orders are executed directly from the trader's DAT and transmitted electronically to the ECN almost instantaneously, sometimes within a fraction of a second. Even if the order is not routed through an ECN, the direct access system also gives the trader direct access to market maker orders.

What are direct access trading systems (ECNs)?

Electronic Communication Networks (ECNs) Direct access trading systems also give traders the ability to trade on the electronic communication networks (ECNs). The simplest way to describe an ECN is to think of a completely electronic stock exchange: buyers and sellers are matched by computer without the need for a human middleman.