Direct Market Access or DMA CFD brokers mirrors the price and liquidity of the underlying instrument as reflected in the instrument's stock exchange (e.g. the SGX). DMA brokerage fees are normally higher but this may be mitigated by the lower spread that traders can get. Traders using DMA have to subscribe to level 2 data feed, which may cost $20-$60 per month, depending on the exchange in question.
Ideally, DMA offers traders the following benefits:
- potential to be a price taker or maker
- little or no additional spreads
- straight through processing
- the ability to participate in opening and closing market auctions
DMA CFD brokers no not profit directly from performance of the trader as the broker typically buy the actual underlying instrument whenever the trader opts to buy.
