Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
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01
Direct Market Access (DMA) Trading
Understanding direct access to financial markets
Direct Market Access (DMA) trading allows investors and traders to interact with underlying financial markets through electronic trading systems, rather than relying solely on prices quoted by a broker.
Through DMA, traders can view underlying market prices, submit their own bids and offers, and access the exchange order book. When combined with Level 2 market data, DMA provides visibility of displayed buying and selling interest, available quantities and prices at different levels.
DMA is used by active traders, professional investors and institutions seeking greater control over order placement and execution. It can be accessed through different trading arrangements, including direct share dealing and DMA share CFDs, depending on the provider and account permissions.
02
How Does Direct Market Access Work?
Automated order routing, market execution and CFD processing
Direct Market Access connects a trader's order to the underlying market through electronic order-routing technology.
When an order is submitted, the trading system performs the required account and risk checks. Once these checks are satisfied, the corresponding order is routed automatically to the relevant market or trading venue, without normal manual dealer intervention.
The order can then interact with available market liquidity. Depending on the price, size, order type and market conditions, it may execute immediately, receive a partial fill or remain in the order book awaiting execution.
For DMA share CFDs, the broker places the corresponding underlying-market order in its own name and automatically creates a matching CFD between the provider and the client. The trader gains exposure through the CFD rather than acquiring ownership of the underlying shares.
03
Inside an Exchange Order Book
Understanding bids, offers, spreads and Level 2 market depth
An exchange order book shows the buying and selling interest available in a financial instrument at different price levels.
On one side are the bids: prices at which market participants are prepared to buy. On the other are the offers: prices at which participants are prepared to sell. The difference between the highest bid and lowest offer is known as the bid–offer spread.
Level 2 market data allows traders to see displayed order sizes beyond the best available prices. This is known as market depth and provides a clearer picture of the liquidity available at different price levels.
For traders using Direct Market Access, this information is particularly valuable because they can submit their own orders into the underlying market, rather than simply accepting a quoted dealing price.
Actual IG L2 Dealer order-book example showing Vodafone share prices, displayed buying and selling interest, and market depth. Historical prices shown for illustration only. Not all market liquidity is necessarily visible in the displayed order book.
04
What Happens When You Place an Order?
Understanding limit orders, queue priority and partial execution
Direct Market Access gives traders control over the price and quantity of orders submitted to the underlying market. However, submitting an order does not guarantee execution.
Placing a Limit Order
Using the historical Vodafone order book shown above, the best bid is 117.50p and the best offer is 117.60p.
Suppose a trader submits an order to buy 10,000 shares at 117.55p, assuming that price is permitted by the exchange's minimum price increment.
Because the order is above the existing best bid but below the best offer, it can enter the order book as a new bid rather than immediately trading against the displayed offer.
Order Priority
Exchange order books generally prioritise orders by price and then time, subject to the market's matching rules.
A buyer offering a higher price receives priority over buyers offering lower prices. Among orders at the same price, earlier orders generally have priority.
Full, Partial or No Execution
If sufficient selling interest arrives at 117.55p, the entire 10,000-share order may execute.
If only 4,000 shares are matched, 4,000 execute and the remaining 6,000 may stay in the order book.
If no matching seller arrives, the order may remain unfilled until it is cancelled, expires or market conditions change.
This demonstrates an important feature of DMA: traders can participate in the underlying market's price formation, rather than simply accepting an existing quoted price.
ILLUSTRATIVE LIMIT ORDER
Buying between the displayed bid and offer
Hypothetical Vodafone order: buy 10,000 shares at 117.55p
Hypothetical example using historical Vodafone prices; not a recorded trade or live quote.
117.55p assumes a permitted price increment. Execution depends on market liquidity and order priority.
05
Where Can Direct Market Access Be Used?
Understanding DMA share dealing, share CFDs and Forex Direct
Direct Market Access is used across different financial markets, but the underlying trading arrangements are not always the same. The distinction is particularly important when considering share ownership, leveraged trading and foreign exchange.
Direct Share Dealing
DMA share dealing allows investors to submit orders into underlying equity markets through a broker's electronic trading infrastructure.
When an order executes, the investor acquires or sells the underlying shares. Level 2 market data can provide visibility of displayed bids, offers and market depth, helping investors assess liquidity and control order placement.
DMA Share CFDs
DMA share CFDs provide access to underlying share-market execution without the trader owning the shares.
The broker places the corresponding order in the underlying market and automatically creates a matching CFD with the client. This allows traders to interact with exchange liquidity while holding a leveraged derivative position.
Forex Direct
Direct Market Access is also available in foreign exchange through specialist arrangements such as Forex Direct.
Unlike exchange traded shares, the foreign exchange market is decentralised. Forex Direct provides access to liquidity from participating banks and other liquidity providers rather than a single central exchange order book.
Through the L2 Dealer platform, Forex Direct is available only to eligible Professional clients, subject to approval.
The markets, trading facilities and order types available depend on the provider, account classification and relevant permissions.
Forex Direct | Direct Share Dealing | DMA Share CFDs | Feature |
|---|---|---|---|
Decentralised foreign exchange liquidity providers | Equity exchanges and trading venues | Equity exchanges and trading venues | Underlying market |
Foreign exchange CFDs | Underlying shares | Contracts for difference on shares | What you trade |
No ownership of underlying currencies | Investor owns the underlying shares | No ownership of underlying shares | Ownership |
Electronic access to participating FX liquidity providers | Electronic access to the underlying share market | Corresponding order routed into the underlying share market | Order routing |
Leveraged CFD exposure | Generally unleveraged share dealing | Leveraged CFD exposure | Leverage |
Eligible Professional clients only; subject to approval | Depends on broker and account permissions | Depends on market and account permissions | Availability |
06
Direct Market Access: Benefits, Limitations and Suitability
Understanding when DMA adds value and what traders need to consider
Direct Market Access offers greater control over how orders interact with underlying financial markets. However, the additional functionality does not necessarily make DMA the most appropriate execution method for every trader or every market condition.
When Direct Market Access Can Be Useful
DMA can be particularly useful when traders want to place their own bids and offers, assess displayed market liquidity or control the price at which they are prepared to trade.
For example, a trader may prefer to enter a limit order within the existing bid–offer spread rather than immediately accept the displayed offer. This creates an opportunity to achieve a preferred execution price, although the order may not be filled.
The Limitations of Displayed Market Liquidity
Level 2 market data provides visibility of displayed orders, but it does not necessarily reveal all available liquidity.
Some orders may be hidden, while other trading activity takes place through dark pools or alternative venues. Displayed volumes can also change rapidly as orders are entered, amended, executed or cancelled.
Consequently, a large displayed order does not guarantee that the same quantity will remain available when a trader attempts to execute.
Execution Control Versus Execution Certainty
DMA provides control over order placement, but traders must understand the trade-off between price and execution certainty.
A limit order can protect the price at which a trader is prepared to transact, but it may remain unfilled. An order seeking immediate execution may trade against multiple price levels if sufficient liquidity is not available at the best displayed price.
Exchange trading rules, order types, market conditions and transaction costs can all influence the final execution outcome.
Who Is Direct Market Access Suitable For?
DMA is generally more relevant to experienced traders who understand exchange order books, liquidity, order priority and the risks associated with different order types.
Traders who prefer straightforward quoted-price dealing, or who do not need detailed market-depth information, may find a conventional trading interface more appropriate.
The suitability of DMA depends on the trader's experience, objectives, understanding of execution risks and the facilities available through their provider.
07
Why Trade DMA Through Guardian Stockbrokers?
Professional trading technology. A broker who knows you.
Guardian Stockbrokers combines access to IG's trading infrastructure with the personal service of an established, FCA authorised UK stockbroker.
For experienced traders, the difference isn't simply the trading platform. It's having direct access to an experienced stockbroker who understands your trading requirements, alongside the technology and market access you expect.
Guardian provides a relationship-led approach to DMA trading, with access to the L2 Dealer platform and eligible specialist trading facilities.
For traders considering Professional client status, Guardian can also review eligibility and discuss available margin arrangements, cash rebates and portfolio collateral facilities. Professional classification is subject to assessment and involves changes to important Retail client protections.
How to get started
Open your account in a few simple steps
1
Apply
Complete the short Guardian application.
2
Open your IG account
We will introduce you to IG to open a trading account.
3
Fund your account
Add funds securely with IG.
4
Access DMA trading
Enable DMA facilities, subject to approval, and start trading.
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