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Sponsored access

A client trading under a broker's market participant identifier with its own connection to the venue, permitted only with the broker's pre-trade risk controls in the path.

The attraction is latency: fewer hops between the client's system and the matching-engine. The historical problem was naked access, where clients connected with no broker controls at all, so a client software failure hit the market directly.

The market-access-rule banned that. Controls must now be under the broker's exclusive control, which in practice means a low-latency risk gateway the broker owns.

Example: a firm's servers sit in the exchange colocation hall and send orders through a hardware risk filter enforcing a 10,000-share maximum order size and a $5 million daily notional cap. Round-trip latency is perhaps 25 microseconds, versus 200 through the broker's full order stack.

Related: direct-market-access, market-access-rule, colocation, pre-trade-risk-check

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