Sponsored DMA

zerohair · Post by **zerohair** » Sat Dec 28, 2013 1:47 am

On the US equities side, there's no such thing anymore as naked DMA (theoretically anyway). The way it works now, DMA has to have certified risk checks that meets all the requirements of regulation 15c35. Every PB is required to make sure each sponsored client has some sort of hardware or software solution sanctioned by them which hits every check before orders go out. As a result, there are many 15c35 solutions out there either offered directly by the PB or pre-certified with the PB via third party. With some PBs, you also have the option of rolling your own and certfying directly with them. As a result, it's not nearly as wild west as it once was, so the assessments are much less likely an issue... unless you're asking them to get a little frisky with the intraday PMA.

Nonius · Post by **Nonius** » Sat Dec 28, 2013 8:13 pm

Thanks zerohair, hitman and aleph!

radikal · Post by **radikal** » Wed Jan 29, 2014 5:02 pm

What market are we talking about?

In Asia, sponsored DMA is pretty common. The exchanges place the burden of risk checks on the brokers, who are generally pretty lax in their application in an effort to attract the low latency business.

In the US, on the derivatives side, it's pretty similar. You have to convince your broker that you are doing all the necessary risk checks or you have to let them do them for you.

I think Zerohair's reply covers this exactly actually. One nuance is that generally margin stuff is only checked post on drop copy.