DMA Brokers
Direct Market Access (DMA) is a popular form of No Dealing Desk (NDD) trading. DMA brokers provide unique opportunities to cut execution speeds and fees when trading forex, CFDs and stocks. Easily confused with other brokerage models, our review sheds light on the differences. We also cover the pros and cons of DMA brokers and list some of the best options available to UK traders.
DMA Brokers
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AvaTrade is a leading forex and CFD broker, established in 2006 and regulated across 9 jurisdictions. Over 400,000 users have signed up with the broker which processes over 2 million trades each month. The firm offers multiple trading platforms, including MT4, MT5, and a proprietary WebTrader. 1250+ financial instruments are available for trading, alongside a comprehensive education center and multilingual customer support.
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Founded in 2002 in Poland, XTB now serves more than 935,000 clients. The forex and CFD broker combines a heavily regulated trading environment with an extensive selection of 5,600+ assets and a commitment to trader satisfaction, featuring an intuitive in-house platform with superb tools to support aspiring traders.
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Established in Australia in 2010, Pepperstone is a top-rated forex and CFD broker with over 400,000 clients worldwide. It offers access to 1,300+ instruments on leading platforms MT4, MT5, cTrader and TradingView, maintaining low, transparent fees. Pepperstone is also regulated by trusted authorities like the FCA, ASIC, and CySEC, ensuring a secure environment for traders at all levels.
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Interactive Brokers (IBKR) is a premier brokerage for experienced traders, providing access to 150 markets in 33 countries, along with a suite of comprehensive investment services. With over 40 years of experience, this Nasdaq-listed firm adheres to stringent regulations by the SEC, FCA, CIRO, and SFC, amongst others, and is one of the most trusted brokers for trading around the globe.
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City Index is an established and award-winning forex, CFD and spread betting broker with top-tier global regulation, including in the UK (FCA) and Australia (ASIC). With 30+ years in the industry, 13,500+ instruments and 24/5 customer support, City Index is a solid pick for aspiring traders.
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Founded in 1999, FOREX.com is now part of StoneX, a financial services organization serving over one million customers worldwide. Regulated in the US, UK, EU, Australia and beyond, the broker offers thousands of markets, not just forex, and provides excellent pricing on cutting-edge platforms.
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LQDFX is a straight-through processing (STP) broker based in the Marshall Islands. The offshore trading firm offers competitive spreads from 0.0 pips, free deposits, 24/5 support and access to the hugely popular MetaTrader 4 platform. LQDFX also runs a competitive bonus program for short-term traders.
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Founded in 1974, IG is part of IG Group Holdings Plc, a publicly traded (LSE: IGG) brokerage. The brand offers spread betting, CFD and forex trading across an almost unrivalled selection of 17,000+ markets, with a range of user-friendly platforms and investing apps. For 50 years, IG has maintained its position as an industry leader, excelling in all key areas for traders.
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Founded in 2015, VT Markets maintains its position as a top Australian multi-asset CFD broker. With 1000+ tradeable instruments and support for the MetaTrader 4 and MetaTrader 5 platforms, this broker delivers a wide range of trading opportunities to over 200,000 clients worldwide. VT Markets is regulated by the ASIC, FSCA, and SVGFSA.
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Trade.com is a trustworthy online broker with a global presence. The broker offers 2,100+ CFDs in major markets, as well as futures, options and more. The broker offers best-in-class platforms and superior analysis tools for experienced traders. The broker is also regulated by top-tier authorities including the FCA and CySEC.
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RockGlobal is a New Zealand based and regulated CFD broker. They offer competitive spreads from 0.1 pips and a large range of trading assets, trading platforms and educational services, with up to 1:500 leverage. Operating in a Tier 1 regulated environment, RockGlobal offers peace of mind and excellent customer support.
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SimpleFX is an offshore forex, CFD and cryptocurrency broker with over 200,000 clients globally. The broker offers a proprietary trading solution, as well as the reputable MT4 platform. Traders can access a vast selection of digital assets with crypto deposits and multi currency accounts.
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Swissquote is a Switzerland-based bank and broker that offers online trading and investing. The company has a high safety score and is listed on the Swiss stock exchange. The firm offers a huge range of products, from stocks, ETFs, bonds and futures to 400+ forex and CFD assets. Hundreds of thousands of traders have opened an account with the multi-regulated brokerage. Clients can get started in three easy steps while 24/7 customer support is available to assist new users.
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FP Markets is an ASIC- and CySEC-regulated broker that offers forex and CFD trading on a broad range of assets through the MT4, MT5 and IRESS platforms. With trading available through standard and raw spread accounts on thousands of international stocks, forex, indices, commodities, cryptocurrencies, bonds and ETFs, this broker has some of the most comprehensive market coverage available. FP Markets also offers a full range of additional features, including educational resources and access to powerful software such as Autochartist.
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Fortrade is a multi-asset, multi-regulated broker with branches regulated by the FCA, CySEC and ASIC among others. The brand offers trading opportunities on a wide range of instruments including stocks, bonds, commodities, forex, indices, cryptocurrencies and ETFs, with competitive fees and support for MetaTrader 4 and a proprietary platform.
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Admirals is an FCA- and ASIC-regulated broker with an excellent range of leveraged instruments, including forex, stocks, indices, ETFs, commodities, cryptos and more. The broker supports the MetaTrader 4, MetaTrader 5 and TradingCentral platforms. With both spread betting and CFDs available and thousands of instruments, this broker provides more flexibility than most rivals.
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TMGM is an ASIC-regulated forex and CFD broker with a vast range of tradeable assets covering forex, stock, index, crypto and commodity markets. The account types on offer provide a flexible choice between no commission or zero spreads, with competitive pricing all-round.
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Infinox is a UK-based and FCA-regulated broker that offers diverse trading products thanks to its STP and ECN account types and support for MetaTrader 4, MetaTrader 5 and a proprietary platform. Clients can also benefit from a free VPS that can support automated strategies and a social trading platform, catering to both beginner and seasoned traders.
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LonghornFX is a forex and CFD broker offering over 150 instruments with leverage up to 1:500. The firm is registered in Saint Vincent and the Grenadines and was launched in 2020. Clients can access a strong selection of cryptos, alongside forex, indices, commodities and stocks. With ECN/STP processing, this offshore broker promises tight spreads and fast execution.
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Coinexx is an unregulated broker that provides leverage up to 1:500 on forex, commodities, indices and cryptocurrencies with deep liquidity, pure ECN spreads and negative balance protection. The broker uses crypto as base currencies and has low minimum deposit requirements of 0.001 BTC.
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Zacks Trade is a FINRA-regulated US broker offering trading on stocks, ETFs, cryptocurrencies, bonds and more through a proprietary terminal. The broker is geared toward active traders and offers very affordable fees on most assets as well as an app and a vast amount of market data.
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Just2Trade is a reliable multi-regulated broker registered with FINRA, NFA and CySEC. The company has 155,000 clients from 130 countries and stands out for its huge suite of instruments and additional features, including a social network, robo advisors and a funded trader programme.
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Vault Markets is an award-winning brokerage headquartered in Namibia. It is an accessible direct-market-access CFD broker with affordable minimum deposits, flexible funding methods and high leverage. This broker offers a very large range of forex pairs as well as commodities and indices through MetaTrader 4 or MetaTrader 5.
What Is DMA Trading?
DMA trading connects investors directly to the broker’s liquidity providers. Aimed at active retail investors and institutions, it promises ultra-fast processing so traders can capitalise on immediate opportunities. It’s a form of no dealing desk trading meaning zero manual intervention. This helps cut costs and allows clients to trade with the tightest bid-ask spreads.
How DMA Brokers Work
Sell-side firms, including brokers and market makers, have direct market access. Normally a broker acts as an intermediary, facilitating trades between the individual trader and the exchange. By offering DMA technology to investors, buy-side firms and traders benefit from full transparency on exchanges and their order books. This can reduce costs and provide superior access to liquidity, but also runs the risk of offering market-making capabilities to buy-side investors.
DMA trading is often compared to Straight Through Processing (STP) and Electronic Communication Network (ECN) models. All three are NDD systems and we’ll run through the differences, but first let’s consider dealing desk systems.
Dealing Desk Vs Non-Dealing Desk
Dealing desk trading is the process of executing trades via a market maker. The broker sets the bid and ask price, and other criteria, profiting from spreads and commissions. For some, especially smaller retail traders, this has many benefits. Brokers take care of the sell-side which makes the trade more convenient for the individual. Fixed spreads are usually promoted as close to the real market price as possible. This can be more lucrative for traders vs fluctuating real-time spreads offered by NDD providers.
In recent years, as technology has advanced, the demand for dealing desks has decreased. Trades are now more often quoted and executed using automated STP and ECN models.
Non-dealing desk trading provides access to a range of liquidity providers, banks and exchanges to get competitive prices. NDD models, therefore, allow traders to access the best spreads available to retail customers. NDD brokers often take their cut through a commission charge.
DMA Brokers Vs STP Brokers
DMA and STP can easily be confused as they both offer a means of connecting traders directly to liquidity providers. The main difference is that STP works by feeding orders to a broker’s liquidity providers who compete for the best bid-ask spreads, with the broker then charging a mark-up for its services. DMA brokers, on the other hand, offer zero intervention reducing execution speeds and trading fees.
DMA Brokers Vs ECN Brokers
The fundamental difference between ECN and DMA brokers is that ECNs connect traders to a network of anonymous liquidity providers. No direct contracts are held when ECN trading, whereas DMA traders form contracts directly with each liquidity provider.
ECNs aim to improve interconnectivity between a diverse range of market participants. But because of the anonymity, liquidity providers may withhold their best spreads within the network. The anonymity of ECNs can also result in slippage and requotes. Whilst ECN spreads are still very tight, transaction costs, execution and processing fees also factor into the equation; with ECN trading sometimes costing more than DMA methods. Both are aimed at larger investors with minimum lot sizes from 0.1.
Choosing A DMA Broker
- Regulation – It is important, especially when trading in serious volumes, to look for a regulated broker. In the UK, Financial Conduct Authority (FCA) regulation is a good indication that the broker is trustworthy.
- Access – What instruments does the broker offer? Do you want to trade forex, stocks, cryptos, commodities? Does the broker allow scalping and hedging? These are all questions you may want to answer before opening an account.
- Software – DMA brokers usually offer sophisticated software to facilitate rapid executions. Make sure they also offer powerful platforms to conduct technical and fundamental analysis. MetaTrader 4 (MT4) and MetaTrader 5 (MT5) are popular among retail traders.
- Costs – As high-volume retail or institutional traders, you may be able to negotiate commission rates. The best DMA brokers typically offer better margin rates for active traders. It’s always worth reviewing commissions and spreads before you start trading.
- Support – Naturally, good customer support should be available should you run into issues. Top DMA brokers offer 24/5 support via live chat or phone during the standard trading week.
Pros Of DMA Brokers
- Costs – By reducing intervention from intermediaries, costs are usually lower.
- Speed – Without manual intervention, DMA brokers offer fast executions appealing to scalping strategies, for example.
- Transparency – DMA brokers usually adopt an open door policy to an exchange’s order books. This can help paint a picture of market trends.
- Algo trading – DMA brokers and platforms can usually be integrated with algorithmic trading software, which can help investors increase the volume of trades across financial markets. Automated trading strategies can also remove interactive human error when identifying patterns and making trading decisions.
Cons of DMA Brokers
- Risk – By offering DMA technology to buy-side investors, there is an increased risk of investors accessing market-making capabilities.
- Size – Minimum lot sizes at DMA brokers tend to come in at 0.1 lots (10,000 CCY), meaning it’s not always suitable for beginners.
- Regulation – This can be a double-edged sword. Whilst strict regulation protects market participants, it also reduces flexibility often provided by dealing desks and OTC trading.
- Spreads – Whilst variable floating spreads are often more competitive, low fixed spreads offered by some other brokers can prove lucrative for savvy traders.
Final Word On DMA Brokers
Whether you opt for one of the top DMA brokers or an alternative model will largely depend on your needs. For experienced, high-volume retail traders, DMA brokers can help improve execution speeds and reduce costs while integrating with sophisticated algo trading software. Transparency and live market pricing are also solid benefits. If you do want to open a trading account with one of the best DMA brokers, see our list.
FAQs
What Is A DMA Broker?
DMA stands for Direct Market Access. DMA brokers provide direct access to an exchange, reducing the need for manual intervention. Subsequently, this can reduce costs and improve execution speeds.
Are DMA Brokers Better Than STP Brokers?
Straight through processing and direct market access are both similar NDD methods, but STP trades are handled by a broker who facilitates transactions and typically charges additional fees. DMA brokers are usually faster and cheaper, reducing the role of the middle man.
Are DMA Brokers Better Than ECN Brokers?
Both DMA and ECN brokers follow an NDD model, aimed at active traders. The main difference is that ECNs connect market participants anonymously, whilst DMA provides direct contracts with liquidity providers.
What Can Be Traded Through DMA Brokers?
Any instrument provided via an electronic exchange can be traded with DMA brokers. The most popular are forex, CFDs, stocks, cryptos, futures and options.
Who Uses DMA Brokers?
DMA brokers typically benefit larger investors, buy-side businesses and high-frequency traders. Retail investors trading in serious volumes and leveraging strategies that require instant market access and immediate executions may choose to open an account with DMA brokers.