Its a bit naive to say that "It's not going to be direct access to the markets, because it's BETTING". The way DMA would work normally is:
a) I place a join bid to buy S&P500 future at 1013, FB/ProSpread placed bid to buy S&P500 future at 1013
b) FB/ProSpread bid gets hit in the market, my bid is filled by FB/ProSpread. That is also what most of their site/documentation and interview by Simon implies.
c) Once my bid is filled, FB/ProSpread reduced a fixed spread, equivalent to $10 commission for the trade and that is how they make money.
I have a feeling that this is how the system used to work when it was launched. Only recently I have started noticing that my orders are getting filled late and after some tests it appears to be getting internalised. If this is the case, they should have had the honestly to inform customers about it.
Please note that in this "ideal case" the round trip commission (or cost of trade) is about $20 per trade or in other words there spread is 0.4 S&P500 points for the round trip trade. That is also the "cost" of doing this trade under spread bet umbrella and still retaining DMA functionality.
However what ProSpread seems to be doing is internalising the orders. Which is what every other spread betting company does. With ProSpread you are getting same internalisation plus you also pay $10 per trade.
For buying and selling as you call it - you can use any discount broker (interactive broker cost of trade would be about $4.8 round trip for the same trade, nearly 4 times less than ProSpread/FB.
Once they start internalising the orders, it is not DMA. It is same CMC/IG-Index. They will take positions against the clients or match client flow to collect spread without doing any trade on exchange and hedge at their convenience like every one else does.
a) I place a join bid to buy S&P500 future at 1013, FB/ProSpread placed bid to buy S&P500 future at 1013
b) FB/ProSpread bid gets hit in the market, my bid is filled by FB/ProSpread. That is also what most of their site/documentation and interview by Simon implies.
c) Once my bid is filled, FB/ProSpread reduced a fixed spread, equivalent to $10 commission for the trade and that is how they make money.
I have a feeling that this is how the system used to work when it was launched. Only recently I have started noticing that my orders are getting filled late and after some tests it appears to be getting internalised. If this is the case, they should have had the honestly to inform customers about it.
Please note that in this "ideal case" the round trip commission (or cost of trade) is about $20 per trade or in other words there spread is 0.4 S&P500 points for the round trip trade. That is also the "cost" of doing this trade under spread bet umbrella and still retaining DMA functionality.
However what ProSpread seems to be doing is internalising the orders. Which is what every other spread betting company does. With ProSpread you are getting same internalisation plus you also pay $10 per trade.
For buying and selling as you call it - you can use any discount broker (interactive broker cost of trade would be about $4.8 round trip for the same trade, nearly 4 times less than ProSpread/FB.
Once they start internalising the orders, it is not DMA. It is same CMC/IG-Index. They will take positions against the clients or match client flow to collect spread without doing any trade on exchange and hedge at their convenience like every one else does.
