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TMI BlogIntroduction of Direct Market Access facilityX X X X Extracts X X X X X X X X Extracts X X X X ..... kers to offer clients direct access to the exchange trading system through the broker s infrastructure without manual intervention by the broker. Some of the advantages offered by DMA are direct control of clients over orders, faster execution of client orders, reduced risk of errors associated with manual order entry, greater transparency, increased liquidity, lower impact costs for large orders, better audit trails and better use of hedging and arbitrage opportunities through the use of decision support tools / algorithms for trading. While ensuring conformity with the provisions of the Securities Contract (Regulations) Act, 1956 (42 of 1956), Stock Exchanges may facilitate Direct Market Access for investors subject to the following co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a reasonable duration, and reinitialisation of access on entering fresh passwords. Brokers should follow the similar logic/priorities used by the Exchange to treat DMA client orders. Brokers should maintain all activities/ alerts log with audit trail facility. The DMA Server should have internally generated unique numbering for all such client order/trades. A systems audit of the DMA systems and software shall be periodically carried out by the broker as may be specified by the exchange and certificate in this regard shall be submitted to the exchange. The exchanges and brokers should provide for adequate systems and procedures to handle the DMA trades. 3. Client Authorization and Broker Client agreement Exchanges sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imits set up are breached or for any other such concerns (d) Withdrawal of DMA facility on account of any misuse or on instructions from SEBI/Exchange. Exchanges shall prepare a model agreement for this purpose. The broker s agreement with clients should not have any clause that is less stringent/contrary to the conditions stipulated in the model agreement 4. Risk Management The broker shall ensure that trading limits/ exposure limits/ position limits are set for all DMA clients based on risk assessment, credit quality and available margins of the client. The broker system shall have appropriate authority levels to ensure that the limits can be set up only by persons authorized by the risk / compliance manager. The broker s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igations of the broker as per current regulations and circulars will continue without change. Exchanges may also like to specify additional safeguards / conditions as they may deem fit for allowing DMA facilities to their brokers. 8. The Stock Exchanges are advised to: make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above bring the provisions of this circular to the notice of the member brokers/clearing members and also disseminate the same on their website. communicate to SEBI, the status of the implementation of the provisions of this circular in the Monthly Development Report. 9 . A review of the working of this facility shall be undertaken after six month ..... X X X X Extracts X X X X X X X X Extracts X X X X
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