Market Maker CFDs

Submitted by Share Trading on 29 January, 2010 - 08:14

Learn about Market maker CFD providers

Market Maker CFDs offer a mirror of prices to the underlying sharemarket price for the stock (with some CFD providers guaranteeing market prices) but there is no obligation for the broker to follow the exact bid and offer exchange in your CFD trade, therefore the CFD provider ultimately has control over the trade entry and exit for the client. By trading your CFD with the CFD provider, your contract is only between you and your provider and it is their choice whether or not they will hedge the exposure of your trade on the market.

Market makers offer a synthetic market on which traders can trade CFDs and the bid and ask prices as well as liquidity are controlled by the provider. The real benefit in trading with a market maker CFD provider is that they typically offer a huge range of securities for you to trade which gives you the opportunity to go long or short with a variety of equities. They offer many more financial securities to trade from sector CFDs, international stocks from USA, Europe, Japan and more as well as other securities like bonds and forex.

The market maker provides the liquidity and it is their decision whether or not to fill the CFD order. Another benefit are lower commission rates since the trades are all in-house and they do not have to pay exchange fees to the Australian Stock Exchange (ASX).