The corporate regulator has taken action against margin foreign exchange services provider Enfinium, cancelling its AFSL.
In a statement released by ASIC, the regulator said it cancelled the company’s licence after an investigation found it failed to have adequate risk management systems in place, particularly on its 'Meta Trader 4' trading platform and plug-in device known as ‘Virtual Dealer’.
“A function of the Virtual Dealer is [the] ability to add a trade execution delay of between one to ten seconds,” a statement from ASIC said.
“An execution delay added by the Virtual Dealer could disadvantage clients to the benefit of the broker, if markets moved against the client during any period of delay.
“ASIC's investigation found that during 2010 to 2013 (relevant period), the Virtual Dealer had been changed on 271 occasions, however Enfinium kept no records of those changes,” the statement said.
The regulator said it was concerned Enfinium’s risk management system was inadequate because the company did not maintain records which recorded the configuration of the Virtual Dealer.
Also, ASIC pointed out the company did not monitor the use of the system nor was there any training for people who “had the ability to modify the ‘Virtual Dealer’” device.
“The Enfinium AFS licence was cancelled due to Enfinium ceasing to carry on a financial services business, after it appointed administrators on 1 October 2014 and was wound up by creditors on 6 November 2014.
“Due to a lack of adequate records concerning the changes to the Virtual Dealer, ASIC was unable to identify whether a trade execution delay had a negative impact on any client,” the statement said.
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