What is DMA (Direct market Access)

Direct Market Access (DMA)

One of the most important aspects of successful trading is dealing at the best prices. In Australia there are two types of trading methods for CFDs – the Direct Market Access (DMA) model and the Market Maker model. At MF Global, we use the Direct Market Access model because we believe it is the most transparent, providing the best and fairest prices for our customers. MFGA share CFD prices ALWAYS EXACTLY reflect the price of the shares on the ASX, which means the price offered will never be re-quoted.

MFGA allows you to join or improve (where possible) the bids and offers of our DMA CFDs. Not only can you be a price taker, you may also be a price maker – i.e. You can post your own bids and offers directly into the ASX cash market (via eMpower trading platform), which is available for all market participants (share and CFD traders alike) to deal on.

Direct Market Access also has the added benefit of offering the ability to participate in the auctions at the scheduled open and close of the market, which is often the most liquid and volatile period of the trading day.

It is important to consider the price spread between the bid and offer prices offered by CFD providers using the Market Maker model compared to the Direct Market Access model when assessing the overall costs associated with your CFD trading.

Understanding the spread is essential to a trader…

Perhaps the most important and little known aspect of successful trading is dealing at the best prices. Some companies charge no commission, but instead have the ability to add cents to both sides of the price of the underlying stock, creating a wider spread. If the price is around A$1.00, a 1c addition to the spread would be equivalent to charging commission of 1% per trade. Using the MFGA DMA model you can trade on or improve where possible the underlying spread. This can be done from as little as 0.125% for the same trade.

The "spread" is the trader’s biggest cost, yet it never appears on the contract note. It is the cost of entering and exiting a financial market. The wider the spread the higher the cost. The cost of the spread therefore needs to be considered, even before taking any commission into account.

MF Global does not widen the spread on CFDs. Instead MFGA provides real market price CFDs. MFGA's CFD prices are ALWAYS the underlying cash market prices for share CFDs and as we hedge our poistion 100% in the real market - there is NEVER a requote. MFGA also allow you to join or improve the bids and offers available in the cash market. The term cash market is often used to describe the everyday stock market (ie. ASX).

So if a customer were to submit an order to buy 10,000 CFDs in BHP MFGA would simultaneously enter the ASX share market, buy 10,000 shares in BHP as a hedge, and write a CFD to the customer at the same price. The customer establishes the position that they want, i.e. Long 10,000 BHP CFDs and MFGA has hedged their short CFD contract with the customer by buying stock in the underlying cash market. This entire process takes approximately one second when using the eMpower trading platform.