If you do, do you know whether your MT4 platform has the plug-in
software known as the Virtual Dealer? You may not – and if
you do, you may not know the full extent of its capabilities.
Margin FX and CFD providers which operate the MT4 platform must
incorporate strict controls to limit, monitor and record access to
the MT4 software and, in particular, the Virtual Dealer.
Virtual Dealer is software which, amongst other things, can
introduce a delay in the execution of trades. That delay can be set
from 1 to 10 seconds. Potentially, an introduced delay could
disadvantage clients where the market moved against clients during
the period of delay - especially in periods of volatility.
cancelled the AFS licence of Enfinium Pty Ltd following an
investigation which examined a number of areas, including the
operation of the Virtual Dealer plug-in. ASIC found that over a
three year period, the settings on the Virtual Dealer had been
changed 271 times but no records of those changes had been
ASIC was unable to determine whether any clients of Enfinium Pty
Ltd had sustained any negative impact as a result of any trade
execution delay introduced by the Virtual Dealer. However, ASIC
observed that where the Virtual Dealer plug-in is utilised by
margin foreign exchange providers, robust risk management systems
must be in place.
This firm acted for another CFD provider utilising the MT4
platform in an investigation by ASIC which also looked at the
operation of the Virtual Dealer. That client has retained its AFS
licence and no adverse action has been taken by ASIC against it. As
a result of the investigation, our client now has stringent
controls and record-keeping concerning the operation of the Virtual
As a result of our work in this area, it is clear to us that,
often, management of FX brokers and CFD providers do not:
understand what the Virtual Dealer is or how it operates;
know who in the company (if anyone) had accessed and/or altered
the settings of the Virtual Dealer;
maintain any records of access to the Virtual Dealer;
have any guidelines relating to the use and setting for the
conduct training in the use of the Virtual Dealer;
identify the risks associated with the Virtual Dealer in its
As a result of the investigation, our client and this firm now
have a detailed knowledge of the Virtual Dealer, its operation and
the risks which might be associated with it.
We recommend that if you operate an MT4 platform, you
immediately ascertain whether you have the Virtual Dealer plug-in
and, if so:
understand how it operates;
have proper guidelines as to its operation;
ensure that there is an appropriate reason for any change of
have a tight system of authorisation for access to it;
have specified trained staff to access and operate it;
maintain records of all access to it and any modification of
record access to it in your risk register.
Naturally, these recommendations also apply if your CFD business
operates any other software of which manipulation is possible or
which might adversely impact clients, and if you use a platform
other than the MT4.
This issue is part of a larger global crackdown by regulators
concerned with unfair practices, including what the industry calls
"asymmetrical slippage". For example, FXCM was
fined USD $8.2m by the US CFTC and
GBP Ł4m by the UK's FCA for behaviour that was
"unfair" to the client in connection with slippage.
AFSL holders in Australia also have the obligation under s912A
of the Corporations Act 2001 to "do all things
necessary to ensure that the financial services covered by the
licence are provided efficiently, honestly and fairly."
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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