DMA or Market Maker

Direct Market Access CFDs

FP Markets provide CFDs via the Direct Market Access (DMA) model because we believe it is the most fair and transparent model available. DMA traders are "price makers" as they can enter and see an equal order flow onto the queue of the underlying exchange. This guarantees they receive true ASX prices on every trade. DMA CFDs result in; real time execution with guaranteed market prices and allows to you to participate in the order book and opening and closing phases of the market.

DMA means no dealer intervention and therefore no price re-quotes and order rejection. It also translates too much faster execution. With FP Markets' DMA CFDs it is not just equity CFDs that are DMA; it is our whole range of global products that are completely transparent. By Hedging 100% of client trades this ensures the CFD providers interests are aligned with that of the client.

The Flow chart below shows how the price fee comes directly from the market rather than through a dealer.

Exchange Traded CFDs

When trading ASX CFDs, orders are entered directly via a Participant into the ASX CFD central market order book. This order book is available for the market to see. All orders are executed on a strict price/time priority. This means that the first order with the best bid or offer price is always executed first. Trading in the ASX CFD central market order book also ensures 'client orders' are always given priority over a broker's 'house orders'.

Market Marker CFDs

Market Maker CFD prices are not identical to the prices on the underlying market. Market makers derive their prices from the underlying market usually adding a spread. As an intermediary a Market Maker has the ability to alter prices in their favour, causing slippage which can be a significant cost of trading. Market makers do not hedge 100% of their CFD positions and have the potential to profit from client losses. When trading through a market maker orders are at the discretion of a dealer. CFD orders are not placed directly on the market but flow through a dealer, resulting in orders being filled at inferior prices, so trading is slower especially in fast moving markets.

Market Makers will not provide clients with market depth and or volumes which can be vital for successful trading. Price re-quotes or order rejections make it very hard to get decent execution and the inability to trade in market auctions means less liquidity.

The flow chart below illustrates how all orders and price feeds flow directly through a dealer and that all decisions are at the dealers discretion.

What are the Core Differences?