What are direct market access (DMA) CFD?

Hi Stella,

As the name speaks for itself, this model allows the trader to have direct interaction with the
physical market. This is the distinguishing characteristic between it and market maker brokers.
Direct market access brokers allow the CFDs trader to interact with live order books which is a
market spread globally. Therefore, it is the best model if you are a trader who is set at getting the
mere reflection of the prices in the market. Initially, only the big financial institutions used to
reap the fruits of direct market access. This has, however, been altered due to vast advancement
in the world of technology, allowing it to benefit even the retail investors.
The trader can take part in the transaction opting to hit the bid button or wait in a queue. This
means that the trader has a chance of entering the market at a lower cost the using the market
makers. It also implies that the trader is the sole bearer of any risk associated with making a
transaction. On the other hand, the trader will reap the maximum profit on the CFD sales.
The brokers play no part in influencing prices. The only get commission on the transactions
made during sales. They act only as a medium between traders and the live market.
The model, however, requires live or real-life interaction which in turn affects the liquidity of the
market. There are a lot of delays associates with this model when completing transactions. Direct
market access is highly decentralized as it is noted that information about the prices is available
to all.
Benefits of direct market access:
 Transparency
 A wide range of markets
 Active participation in the market
The only shortcoming is that there is a lack of market liquidity due to delays as traders and the
live market are required to have an active presence for transactions to happen.