Direct-Access Firm

direct-access firm

A brokerage firm that enables customers to place orders directly with Nasdaq market-maker firms, electronic communications networks, and organized securities exchanges. Direct access is particularly important to investors who attempt to profit from rapid changes in stock prices.

Case Study In August 2001 online brokerage firm Waterhouse announced it had agreed to purchase for cash R.J. Thompson Holdings, a direct-access firm. Thompson, a brokerage firm with approximately 13,000 accounts, catered to active traders by offering its customers direct trades to market makers and electronic communications networks. The acquisition allowed Waterhouse to be more competitive with other brokerage firms offering direct access, including Ameritrade, Datek Online, and Charles Schwab.

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Direct-Access Firm

A brokerage that provides transaction services predominantly or exclusively. That is, a direct-access brokerage provides clients with little or no research or investment advice; rather, it specializes in completing the transactions for which its clients ask. Direct-access brokerages usually rely on computer programs to find matching offers or bids. They usually charge lower commissions than other brokerages and rely on a high volume of orders for a profit. See also: Deep discount brokerage firm.