Hi guys, I understand the concept of Direct Market Access on stocks, futures and other regulated financial products. But some Forex & CFD companies are talking about Direct Market Access; and I don't understand how this concept can apply for those markets as they are not regulated/does not have "central" entities like exchanges . Thanks in advance for your replies
I believe they are give you direct access to a list of banks that have agreed to make markets on their platform.
With DMA CFDs the order is done on the cash market then converted to a CFD. So if 2 traders bought 1000 VOD, one buying the shares and the other a CFD trade they'd both be filled at the same price and you'd see 2000 shares go through the exchange. It's as simple as that.
Is this the model followed by cTrader /c Algo where the platform is hooked up to banks making fx markets? How does CTrader make their $. Their website has demos,etc and partner links which I assume would be the banks where traders have to open an account. No mention of how much trader pays per month, purchase,etc.
InteractiveBrokers does that. They fill CFD orders directly in the underlying shares. Of course, this is not offered to U.S. IB customers, since CFD's cannot be offered in the U.S., just to foreign customers.
CTrader is just a platform. The broker usually has to establish or bring along relationships with banks and LPs. From that point, the fee structure varies from broker to broker, since each has their own cost structure respective to their lines of business. And of course CTrader wants a cut for their services too. So in the end, you gotta check on the broker level to verify costs for CTrader. Spotware has a list of brokers they work with on their site.
So with the prime brokers listed through CTrader trading CFDs, I shouldn't have any fake MM market manipulation or fake margin calls that are offered from CMC markets, IGMarkets, and Saxo Bank Cough Cough.. ? ? ?
In theory, by CTrader's site, the broker would be running the agency model (just representing you as you trade with the LP's and banks.) That being said, they can still choose to take on the risk of the account.. but they can't mess with the price feed outside of the parameters they've set globally (markup and such.) "In theory" since this is based off Ctrader's site public facing info. This all applies to forex. As for DMA CFDs, I have no idea, as their site doesn't mention anything about them. (I'm also not sure where you got that CTrader does DMA CFDs.. they might be able to do CFDs, but not DMA on exchange CFDs last I checked. At least, not in the IB or ASX way of doing DMA CFDs...) Why not email them about it... all the info I have is just what they show on their site (which you can find too if you look in the right place.)