What are direct market access (DMA) CFD?

[Stella]

Explain about the direct market access in CFD, please.

[Dan]

Hello Stella,

As the name suggests, DMA CFDs are contracts for differences that allow investors to access the market directly. This is another model of CFDs other than those offered by the market maker. 
Market maker CFDs are offered by the provider who will give you the commission layout on their website, clearly showing you the commission and the spread represented by a certain portion of a charge.
Direct Market Access CFD will give you the chance to link with active order books whose exchanges are worldwide directly. During the past times, DMA was benefitting large financial institutions. The excellent technology revolution taking place has seen direct market access accessible to even retail investors.
In DMA CFDs, an instruction is given directly to the real essential market. Therefore, the market makers do not intervene in this market, leading to instantaneous execution and accurate market prices. DMA will confirm the trade to the CFD trader immediately the sells or buys the share.
Direct market access CFDs are usually transparent; hence they will allow you to see all the market undertakings that are going on. Your orders enter the market directly; therefore, you can hit the offer or the trading line.
In direct market access CFDs, the cost of entering this market is usually lower than that of using a market maker. One other major benefit of the direct access market is that you are given a bigger spread to save a fortune. 
You also need to note that this market is decentralized. You will have an equal opportunity to affect and view the price with all other traders.

[Bazinga]

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.