Pacific Financial Derivatives Ltd (PFD) is a New Zealand registered company. It is regulated by the Financial Markets Authority (FMA) under license number FSP 28944. The company complies with the regulatory requirements and segregates investor’s funds from its own funds.
PFD offers over 60 instruments for online trading that are distributed into 49 currency pairs, 10 global indices and 5 commodities. The website has a spreads comparison section and you can see real-time spreads for each account type. While watching it, the average spread for the EUR/USD pair was 0.7 pips in the PFDTrader account and 0.4 pips in the PFDPro.
There are three types of accounts. The PFDTrader account offers zero commission, up to 1:300 leverage (if the equity is below USD5,000), and requires no minimum deposit. The PDFPro account offers tighter spreads at the expense of the USD1 per traded lot. The leverage is 1:100 and you can start with as much money as you want. The PFDProPlus account provides the same conditions as the PDFPro but you must invest at least USD1,000 initially.
Customers can trade using one of the most innovative and powerful online terminals – MetaTrader 4 (MT4). Its innovative automated trading offers the perfect solution to the most demanding trader’s needs. The platform is available as a desktop version or as a mobile application for iOS and Android devices. PFD also offers a MAM (Multi Account Manager) account suitable for professional traders with multiple accounts. It supports all types of system trading including Expert Advisors. Clients can feed their accounts through bank transfers, credit/debit cards, Sofort, iDeal, Skrill, giropay and Poli.
There is an opportunity for you to become an introducing broker (IB) and refer clients to PFD or become a white label partner and PFD will act as an execution broker.
Let us look at the legal section of the website. The Product Disclosure Statement document reveals that all types of orders are subject to slippage and stop loss orders are not guaranteed. That means stop loss orders will be executed at the first available price and they may not always limit your losses as you expect. The same document shows that you cannot avoid the risk that you will lose more than your deposited funds. That means there is no negative balance protection here. The Key Features section informs that PFD acts as a principal to all client’s transactions. The company may decide to hedge some position with its counterparties, but this will be a separate transaction. This means the company acts as a market maker and it does not transmit each client’s order to liquidity providers. So, it benefits from client losses, which is a conflict of interest.
Overall, PFD is a regulated financial company based in New Zealand that has operated for several years. Trading conditions are competitive, and you can trade through one of the best platforms in the world – MT4. Despite all the allegations, we were unable to find evidence that the company operated through the STP model. All the documents show that PFD acts as a market maker and there is a conflict of interest. Moreover, there is no protection against negative balance, and you can lose more than you invested.