Direct Market Access
Direct Market Access CFDs
Experienced traders understand that Direct Market Access (DMA) ensures accurate and transparent CFD execution based on the underlying price and volume ensuring zero market maker related slippage to give confidence of best execution.
When a DMA CFD order is submitted to PhillipCapital a corresponding order is sent to the underlying exchange. When the order is filled on the actual exchange the Phillip CFDTrader is updated to reflect the execution on the CFD however the client has no rights to the underlying asset. PhillipCapital provides DMA CFDs over the Australian and Singapore markets only.
Direct Market Access (DMA) vs Market Made (MM) CFDs
Key difference between DMA and MM Share CFDs
- PhillipCapital will send the corresponding stock order to the exchange via the prime broker, and clients can see the order in the market depth
- Orders are filled based on last done price, based on price/time priority (not bid/ask prices)
- Commission rates are generally higher on DMA Share CFDs
- DMA CFD prices mirror the underlying market with no additional spread.
DMA CFDs are essentially the most transparent and true pricing available to clients due to the fact that they mirror the underlying market. Clients are able to improve the bid and ask prices by submitting orders at desired price and quantity. Their orders can also participate in the order book of the exchange and market liquidity. Once a DMA CFD order is submitted, the order would appear in the market depth of the underlying market.
Under a Market Made CFD model the CFD provider essentially acts as a liquidity provider for clients. The firm creates its own ‘artificial market’ for the product based on the underlying and is able to quote its own prices.
Prices will typically track the underlying but some CFD providers may add an additional spread between the bid and ask prices . This spread is normally where profits are earned for the provider taking the risk incurred when providing liquidity for clients. PhillipCapital will not quote any additional spread for Market Made CFDs aiming to provide transparent pricing.
Under the soon to be released PhillipCapital Market Made model client orders are executed based on the prevailing bid and offer prices. Typically commissions are lower on MM CFDs due increased efficiency in the model and lower hedging costs incurred by the provider.