Apple’s MetaTrader Ban: What's Changed in CFDs?

On Saturday, September 24th, the FX and CFD industry was greeted with a crude shock: Apple had suddenly pulled down MetaQuotes’ MetaTrader 4 (MT4) and MetaTrader 5 (MT5) trading apps from its App Store. MetaQuotes later confirmed to Finance Magnates that it had received a letter from Apple the day before, stating that the apps did not comply with the App Store Review Guidelines.

To make up for this, MetaQuotes on Monday launched a new MT5 web terminal that was "redeveloped from scratch" and makes it possible for traders to "fully manage their trading accounts using a mobile device."

MetaQuotes' shift to a stricter white-label policy towards offshore brokers in July may have foretold of the troubles ahead, but the move by Apple caught the industry by surprise. Finance Magnates reported that the development, which many attributed to the rising number of scams being perpetrated by bad actors, created 'lots of headaches' among market participants.

It’s been several weeks since the news broke, and as the dust settles, Finance Magnates explores how Apple's delisting has affected the industry so far.

A Threat to MetaTrader's Dominance?

With MT4 first introduced 17 years ago and the upgraded MT5 following it five years later, MetaQuotes has established itself as an industry giant with a strong market presence.

According to the Finance Magnates Quarterly Intelligence Report, MT4 and MT5 as a pair accounted for 83.8% of the total market share at the end of the second quarter of this year.

But, if the trading platform has consistently led the pack, the devices traders use it on have been gradually changing. As of the first quarter of this year, trading on mobile devices accounted for 60.7% of CFD trades, while 39.3% was attributed to the desktop. Tracking back to Q1 2021, mobile usage stood at 55%, with desktops claiming 45% of total trades.

The dominating market position of mobile trading underscores why Apple’s removal of the MT4 and MT5 trading apps could be a significant market-altering move, especially for MetaQuotes which boasts the largest slice.

The suspension of the apps does not affect existing iOS users, but foregoing the acquisition of iPhone users is not something brokers can easily swallow. And, as alternative tech providers gleefully report, brokers have been flooding their gates.

Brokers in Search of Alternatives

In the days after MetaQuotes' announcement, it was hard to avoid the 'business is booming' messages by technology providers on LinkedIn. Now, we have reached out to several executives in the field to get a more nuanced image of who their new prospects are.

“Normally, they are small-to-medium-sized brokers that suddenly found themselves unable to survive,” explained Maoz Tenenbaum, the Vice President (VP) of Sales at Leverate. “Their primary concern is localization (supporting the languages of their traders), and the smooth and safe migration of data,” Tenenbaum explained.

Others have reported interest from a 'real mix' of clients, from small white labels and large global brokers.

“Some are concerned with provider stability, app support, and integrations. Others are looking to the future to ensure they don’t get locked into the same platform as everyone else,” said John Light, the VP of Trading Solutions at Devexperts.

And, while mobiles are obviously a must, desktops still serve important functions. “More than 50% of trading comes from mobile users, so mobile access is vital, but traders still use desktop apps for running algos, though performance and latency are critical,” Tom Higgins, the Founder and CEO of Gold-i, pointed out.

Smooth or Rough Integration?

New business means new concerns, too. Tenenbaum noted that data migration is a significant concern the company is seeking to address.

“The main challenge is the migration of data to ensure all traders, assets, and positions are moving smoothly without causing traders and brokers any inconvenience,” he noted.

To address this, Leverate created a dedicated team specializing in migration from MT4/MT5 to the company's Sirix trading platform.

Spotware Systems has taken a different approach. “Our goal is to be proactive in accommodating new brokers that are being onboarded,” said Aris Christoforou, the firm’s Head of Marketing. In mid-October, the company announced new investments in major infrastructural upgrades and disclosed that it was investing in improved connectivity to Equinix NY2 and LD5 data centres in New Jersey and London, respectively, and in new proxy points in Vietnam and Indonesia.

But, despite the efforts being made to facilitate integrations, all providers have reported smooth operations. Light said the trading provider’s onboarding process is very streamlined.

“When we onboard a broker, we integrate to any LP or LP hub of their choice and have a lot of these connections already. So, it is very easy for an existing broker to get up and running quickly as we can connect to their existing bridge providers,” Light explained.

Higgins also noted that integration for the company is a very straightforward approach as the trading platform provider guides its partners and clients through. "We provide the FIX specifications and a test system to develop against and then help the partner or client through conformance testing.”

Is Due Diligence Changing?

Since the removal of MetaQuotes’ MT4 and MT5 was allegedly related to unscrupulous behavior, one may wonder how tech providers inspect the 'flood' of inquiries before onboarding clients. As they are not obliged to require a regulatory stamp of approval, the due diligence process they perform is varied.

Light noted that the firm runs a KYC procedure, sanctions checks, and client due diligence on all its brokers even when it has no such regulatory obligation.

He also suggested a new standard for the industry in the form of the Global FX Code of Conduct: “We have publicly signed the Code and adhere to the ethics and governance principles; I would encourage all tech providers in our space to do the same.”

But what do you do when you are focusing on the nascent, hardly regulated crypto market? Higgins told Finance Magnates that while unregulated firms may work with Gold-I, the London-headquartered firm conducts its in-house due diligence to check that a company is legitimate. "Brokers would need to show us their company registration details," he said, and regarding FX, he added, "we always discuss with them what they can and cannot do in relation to LPs and MetaQuotes, etc."

Weighing in on the subject, Christoforou told Finance Magnates that the cTrader’s provider works exclusively with “white hat operations”, and had not changed its due diligence procedure since its inception 12 years ago. “Spotware is known in the industry for fighting malicious brokers, refusing service to multiple bucket shop brokers and brokers accepting US clients.”

Unregulated Brokers: Harder Days Ahead?

And while the sands are shifting for tech providers, scammers keep perpetuating fraud across the board, from the US to Israel.

Apple’s removal of MetaQuotes’ MetaTrader apps is most likely being felt among unregulated brokers, especially those in offshore jurisdictions. But, will it curtail them? Higgins believes that Apple’s move “will just change how traders use the apps.”

“Tech companies like MetaQuotes should register one app per broker in the App Store, not a generic one, and then the problem goes away,” Gold-i's CEO said, adding that: “the web-based app is also a perfectly viable alternative now."

However, Tenenbaum predicts a market consolidation. “There is no doubt that it will encourage brokers to operate as legitimately as possible, or they will disappear altogether."

But whatever the eventual fallout of Apple’s move may be, it probably won’t lead by itself to the cleanup some wish to see. "It’s up to all participants to make it impossible for these brokers to operate," Light concluded.