New Zealand's stock exchange (NZX) is launching Direct Market Access (DMA), a system that will provide accredited firms with direct connectivity to the market.
DMA will be rolled out in two phases. The first phase, called Direct Principal Order Processing (DPOP), will commence on 4 August 2004 and will allow accredited firms to nominate clients, such as fund managers, to enter orders directly into the system to be submitted to the market.
CitiGroup Global Markets (NZ) and ABN AMRO New Zealand have already been approved to go live with DPOP. NZX says it expects another three firms to be accredited by the time DMA goes live.
Phase two, called Direct Client Order Processing (DCOP), will be rolled out in consultation with accredited firms. The system allows firms to enable their clients to enter orders directly into the market, without going through a NZX advisor. This activity will be controlled through the use of electronic filters which will apply to each order submitted to the market.
Access to the system will initially be available via an application developed by Iress Market Technology.
NZX says it has made a "significant technology and regulatory investment" in order to introduce DMA and the result will be a more liquid market with a greater capacity.
Carl Daucher, NZX Strategy, says the introduction of the system provides firms with the ability to tailor their services to suit clients: "Firms will individually determine the right level of access to the New Zealand market for each of their clients."
"In addition, DMA will serve investors who use sophisticated trading strategies that require instant or automated order execution. This is especially important for trading in futures and options contracts which we're introducing later in the year," says Daucher.