Revisiting CFDs

Pepperstone Introduces Direct Market Access CFD Trading

The offering is already live on the broker’s ECN Razor Account and STP Standard Account offerings though cTrader and MT4.

Australian broker, Pepperstone has introduced Direct Market Access (DMA) CFDs through both platforms currently offered to its clients by the company. Holders of the firm’s ECN Razor Account and STP Standard Account will get access to DMA CFDs using either cTrader or MT4.

According to information on Pepperstone’s website, clients may choose from 9 asset classes accessing over 80 primary and secondary derivatives and commodities exchanges. A DMA CFD offering differs from the regular CFD contracts typically offered to retail traders.

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DMA CFD trading constitutes a true agency model execution

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When a client buys or sells a CFD the position is immediately put out into the broad market. Therefore, DMA CFD trading constitutes a true Straight-Through Processing (STP) agency model execution.

The orders sent out by clients are processed on a “fill or kill” basis, which warrants no slippage. In addition, Pepperstone’s offer handles multiple fills through the broker’s liquidity providers. Both positive and negative slippage are enabled as there is no broker intervention on pricing.

Back in December, the Australian arm of publicly traded Japanese brokerage, Invast Securities announced the launch of a new direct market access CFDs offer. The brokerage has announced that it will be offering DMA CFDs to Australian clients through IRESSTrader.

In contrast to market makers for CFDs, a DMA solution transfers the orders to the market. In addition to eliminating the conflict of interest when trading against a market-making broker, the actions of the trader may actually influence the price of the security on the exchange where it is traded as all CFDs are fully covered.

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