Pepperstone is a trading name of Pepperstone Limited. Founded in 2010, the company is authorised and regulated by the Financial Conduct Authority (FCA) under registration number 684312.
There are more than 150 trading instruments, broken down into 61 currency pairs, 14 major indices, over 60 shares, commodities and cryptocurrencies. The company declares it provides deep liquidity with pricing derived from multiple sources. Spreads are variable and during liquid times the average spread of the EUR/USD pair is close to zero, while the one of Bitcoin starts at USD10.
There are two types of accounts: Razor and Standard. The Standard account is designed for beginners. The average spread for major currency pairs just above 1 pip and deals are free of charge. The Razor account is suitable for scalpers and algorithmic traders. The instruments in it have close to zero spread at a commission of GBP4.59 for a traded volume of 100k. The company claims most orders are executed in less than 30 milliseconds, so the scalpers and traders who use expert advisors are welcomed.
Customers can trade through one of the well-known platforms in the industry – MetaTrader 4 and MetaTrader 5. MT4 enhances customer’s trading experience with real-time charts, in-depth news and analytics, as well as plenty of order management tools, Expert Advisors (EAs) and indicators. The recently released version of the MT5 terminal offers the ability to hedge positions as well as several new features. In addition, the platform cTrader is also available with this brokerage company. Among other things, cTrader can also show the depth of market (level II quotes), detachable charts and Financial Information Exchange protocol (FIX API) that can be used by introducing brokers. All platforms offered are able to provide a social trading option, so that the deals of profitable investors are copied into the customer’s account.
Educational materials as well as market news and analysis are also available on the website. Pepperstone accepts debit/credit card and bank transfer payments.
The support section provides interesting reflections on whether the company is a market maker. According to the written, Pepperstone doesn’t consider itself as a market maker because they think a market maker is someone who operates a dealing desk and creates its own prices and they don’t operate in such a manner. On the other hand, Pepperstone is not a pure STP or ECN broker because it doesn’t hedge each client’s position to the liquidity providers. This means that they run the risk of not transferring each position and hope that customers will suffer a loss. If a client is profitable, the company loses. In our opinion, this mode of operation is closer to that of market makers.
Let us look at the legal documents. The ‘Terms and Conditions’ document informs that there is negative balance protection if you are a retail client. If the stop out procedures don’t prevent you from incurring a negative equity balance, the company will adjust it to zero within one business day. The same document warns that stop loss orders are not guaranteed and can be filled at a different price. Another thing to mention is that all types of orders are subject to slippage.
We can conclude that Pepperstone is a strictly regulated brokerage firm that acts more like a market maker than a pure STP broker. Nevertheless, traders have three of the most popular platforms in the industry that provide negative balance protection.