Pepperstone Forex

Why don't you do your own research and read through the thread you lazy fvck, instead of asking for all the information to be handed to you on a silver platter. But that's just a thought.

Taking Pepperstone with a grain of salt

THE AUSTRALIAN JANUARY 31, 2015 12:00AM

Foreign exchange trading has always had the thrill factor. Source: AFP

FOREIGN exchange trading has always had the thrill factor. Large amounts of money are won and lost in the blink of an eye, as the Swiss currency debacle graphically illustrated earlier this month.

Yet despite the risks, foreign exchange trading ranks as one of the fast-growing activities among private investors. The desire to make a quick buck, increasingly by trading online, has sparked a drastic rise in the number of retail currency brokers.

In Australia, no firm has ridden the wave better than Pepperstone. Its two founders, Owen Kerr and Joe Davenport — both in their early 30s— have become poster boys of the sector, scooping a rash of industry awards after jumping, seemingly from nowhere, to a position of global prominence.

According to an industry news and resources firm, Forex Magnates, Pepperstone ranks as the world’s 12th-largest retail foreign exchange broker.

The firm’s heady climb was mirrored by the ballooning fortunes of its founders. Last year, Kerr, now a regular presence in the country’s business media, shot on to the BRW Rich 200 list with his wealth estimated at $250 million.

Talk of an imminent initial public offering, valuing the firm at $600m, seemed to be the icing on the cake.

Pepperstone , according to Kerr and a number of bankers, could be the next OzForex, the foreign exchange payments company that enjoyed a buoyant spell in its first year before a recent decision by Westpac to withdraw its services from the sector sent the stock into slump.

The two businesses are in fact very different, but Pepperstone’s seemingly unstoppable success had captivated and charmed the media.

It helped that Kerr, an affable and accessible person, was always happy to explain the reason behind the company’s incredible achievements.

While the details vary slightly from one interview to another, the basic explanation was that Pepperstone had invented a product that does something faster, better and cheaper than the incumbents. Simple.

As one former colleague stated: “Owen is an incredibly good salesman. They are exceptionally clever at marketing.”

Yet once Kerr’s public remarks are subjected to deeper scrutiny, a slightly less consistent picture emerges. Many of their rivals complain that the media has provided Pepperstone with an easy run or simply don’t understand the business.

Take, for instance, the reference made in an interview published by the Financial Review in aftermath of the Swiss currency bombshell. Kerr said the firm had avoided the calamity – which ranks as one of the greatest shocks to the currency system since the collapse of the Bretton Woods system in 1971 – due to a combination of foresight, conservatism and high-speed trading technology.

He claimed Pepperstone liquidated clients positions “one quarter of a second after the announcement via a high-speed optical fibre cable connection to the interbank market. This allowed them to unwind their positions before they went into negative balances”.

The comments drews widespread derision from rivals. The chief executives of two competitors pointed out the high-speed cable was standard technology used in the industry and connected into NY4, a giant multi-user data centre in New Jersey owned by Equinix, the largest global provider of these structures.

Kerr later clarified to The Weekend Australian that Pepperstone does indeed use Equinix. When asked whether this was technology widely used by brokers, he stated this was not the case as “it is costly to introduce and maintain”.

In previous interviews, Kerr has made much of his and Davenport’s decision to construct their own hardware, software and fibre-optic cable network. And yet Pepperstone uses one of the most popular software programs in the industry, MetaTrader 4, which costs close to $100,000 to buy off the shelf.

Kerr acknowledged MT4 “is not unique” but insisted its “proprietary back-office, client area, aggregation systems, electric communications network, settlement systems, payments infrastructure, IT Technology, Server Farm and low-latency infrastructure” all are.

He said this back-office system has “enabled us to disrupt industry margins and provide low-cost FX brokerage to our client base.”

Pepperstone certainly offers low margins but so too do many other players.

Its recent accounts to June 2014 also reveal little investment in technology.

Instead, the statements show the firm racked up a profit of $28m for the year.

On the back of this, the two founders extracted $32m from the company in dividends, even though their total liabilities stand at $94m compared to $83m in cash and cash equivalents. The accounts also reveal there is a $14m shortfall in clients’ funds with $85m recorded as owed to clients while $71m is held on segregated client accounts.

Australia remains one of the few countries, alongside Cyprus and Mauritius, where brokers can use client funds on deposit as collateral for potential losses incurred by the firm on other currency bets.

The market is fiercely divided about whether greater regulation should be imposed but those in favour argue the current system has enabled mostly online brokers to boost their growth without having to risk much of their own capital.

Yet despite Pepperstone’s relatively slight financial status, Kerr shows no sign of a conservative footing.

In the wake of the Swiss franc shock, he claimed the firm was pursuing one of the largest victims of the currency upheaval, Alpari, which had until that episode ranked as the third-largest forex broker.

A number of players in the industry have expressed surprise at this.

One senior executive within a large forex broker in Britain claimed this would necessitate an enormous outlay, comparable, he said, to the $US300m lifeline provided to US-based FXCM by Leucadia.

In response to questions about this mooted acquisition, Kerr said Pepperstone has “dropped out of the Alpari acquisition process as we thought the price asking (sic) was excessive”. But he insisted the IPO of Pepperstone was still “on track after we complete acquisitions of the distressed brokers in our industry”.

There are doubts though about the appetite of institutional investors towards an IPO, given the broader industry has been left reeling from the Swiss franc shock.
The head of one domestic firm stressed the “hangover” would take some time to dissipate.

Yet while many in the sector remain bemused at Pepperstone’s exuberant descriptions of its business prowess, few dispute the firm’s impressive growth track record.
The trouble is that much of that expansion stemmed from its Japanese exposure from where it is now black-listed after the corporate watchdog, ASIC, discovered the firm was trading there without a valid licence.

In its IPO prospectus, Pepperstone stated 40 per cent of its trading revenue was derived from Japan, while a mere 8 per cent originated from Australia.
The plan now is to concentrate on China, a market widely coveted by brokers due to the swelling ranks of the middle classes and the Chinese love of riskier pursuits like gambling.

Kerr claimed financial services are “the second wave of exports to China” following the collapse of the mining boom and said the “Australian Financial Services Industry can now service this market unfettered”.

He added the China Free Trade Agreement “is great for us”.

However, over-the-counter forex brokers like Pepperstone are specifically excluded from this new trade push.

In its latest results, released last week, IG Markets, a Britain-based company and one of the largest forex brokers, cautioned investors about any excitement from its Chinese operations.

Its Asia Pacific head, Tamas Szabo, insisted “no regulatory framework exists in China or any Free Trade Zone allowing retail OTC foreign exchange brokers to operate”.
He added that while there were encouraging signs “our view is that the regulatory environment is not supportive of a direct offering and is unlikely to be explicitly so for some time”.

Thank you Buddy, much appreciated.

The bigger they are the harder they fall

I just spotted this in another forum


http://www.donnaforex.com/forum/inde...topic=3544.840


I love these paragraphs

Kerr acknowledged MT4 “is not unique” but insisted its “proprietary back-office, client area, aggregation systems, electric communications network, settlement systems, payments infrastructure, IT Technology, Server Farm and low-latency infrastructure” all are.

He said this back-office system has “enabled us to disrupt industry margins and provide low-cost FX brokerage to our client base.”

Here is the reality....

proprietary back-office - really just an off the shelf system built by www.setfive.com. This is the product www.getmetaforce.com

client area - same as above

aggregation systems - fortex is their aggregator, its not a proprietary system. Owen Kerr is even quoted on the fortex website.http://fortex.com/about-us

electric communications network - Again this is fortex, they are not a real ECN anyway as the operate a B book.

settlement systems - no such thing as forex is OTC and does not require settlement

payments infrastructure - NAB credit cards, Neteller, Poli, Skrill, Citadel, Ayden are all third party companies and Pepperstone simply cant own their infrastructure. They would only have API access.

IT Technology - Hmmm a bit hard to own this when it is out sourced.

Server Farm - Fortex host their servers in NY4

low-latency infrastructure - more like the Equinix data centers infrastructure not Pepperstones.

I love this Owen Kerr guy, a true used car salesman indeed !!

Love how these ic markets and other broker's dumbass cheerleaders come in here and start posting all sorts of garabge, while ic markets is one of the worst ones out there. If a review sounds wicked fucked, then its probably bs, or some chap that is clueless to what is going on and cries when he looses a quarter... Pepperstone one on top of my list for now . No issues yet.

Hope it helps.

Ramy3

You seem to know a lot about this.
Who then would you say is "the real deal broker?" - who should we use?
I am an Alpari orphan, looking for a new home..

we have learnt some lessons recently. the swiss currency crash and Russian rubble spread up to 4000 pips. both of these wiped out your account whilst trading with pepperstone, if you were trading at these times. im still learning forex and a tiny player. but if you are a big professional player you would not be using any of the smaller brokers like pepperstone. you would use Citibank or one of the big forex players. you would not have a lot of money in an account with any of the smaller brokers like pep. I say again the two recent forex events, swissy and Russian rubble crash, wiped out your account if you were trading at the time of the crashes.

I've been actively looking for a new broker since bt prime went under with absolutely no luck.

Every broker that I have came across has had some sort of issue that kept me from opening or funding a new account.

I have no idea where I am going to land either.

Maybe there is a group home for all the Forex "Orphans" out there

The SNB should probably bankroll it.

Try this..

http://www.dukascopy.com/swiss/engli...rbank-Account/

You Have good experience with Dukascopy ?

How are the spreads,slippage etc

can you scalp and news trade?

http://www.forexfactory.com/showthre...79#post8035079

I have live accounts in both brokers, and they are all good in my oppinion.

I have no Idea if your trying to be cute or not but that link answered none of my questions

No..right now with fxcm searching for new brokers found this.

Found What?

Do you read English? Definitely Forex trading is not for idiots like you. Don't waste your time.
Bye, bugger.

My man I'm coming from a prime broker that has a $100K min buy in so I must be doing something right.

I'm not taking micro, mini, nano, non existent Lot trades in my mothers basement like yourself. If your even doing any trading

I could care less that you have over 800 posts. Just means you have plenty of free time and like to voice your opinion AKA your a Brokester

You wrote nothing when you responded to me dunce. You can see for yourself because I quoted you in my post. So I can read but obviously you cant type.

The wording that's there now was edited after you realized you didn't place it there in the first place. Otherwise it would be in my quote

" I have live accounts in both brokers, and they are all good in my oppinion."

Oh and just so you know opinion only has 1 p

No need to block me like a little girl I have no interest in arguing or ever conversing with you again.

And stop with those winking emoji just makes you look like a little fairy

Would recommend spreading your money through a few brokers. If one goes down, or starts playing tricks on you, well it's just a part of your money that is affected.

All info needed about this broker is within this thread. Most of us here have answered your questions multiple times, and are sick of dealing with the same questions.

Good luck,

Ramy3

That is exactly what I am going to do open multiple accounts.

So as not to run into this situation again of scrambling for a new broker if one goes down.

I fully understand that guys feel they have answered the same questions multiple times in the past and are "tired of" repeating themselves.

But given the current landscape and new perils in the FX world right now.

I am not willing to accept any answers that were not posted after January 15th of this year.

Because prior to that date my broker was one of the best you could get at that price point. I never had any issues.

And now post Jan 15th I am in contact with Rollings Oliver a "Licensed Insolvency Practitioner" concerning the return of my Trading deposit.

That will almost definitely not arrive to me whole and will take weeks if not months to receive.

But if someone would have asked me on FF Jan 14 how BT Prime was I would have told them I have dealt with no better broker.

So the old "Ill give you a fishing pole" go fish type answer concerning the search of the forums does not apply to anything posted prior to January 15th of 2015.

I am far from lazy and have searched these forums and every dark corner of the internet I could find and "real" answers are slim to none concerning my search for a

normal FX Broker.

Hi Bodyguard,

I have personnally been with Pepperstone in the recent past and have been pretty satisfied in term of trading (execution, slippage, and so on)
I didn't find their customer suport very good, but not that bad, and only dealt once with them, so hard to judge.

Now, and it amazes me I don't read much about this, concerning the 15 january, there have been 2 main issues with BAD brokers imo:

1) The fact that some just SHUT DOWN everything on CHF pairs, with 3 consequences:
- Nobody could open new trades in CHF pairs and benefit from the situation, which is really the less important consequence.
- People who had open limit orders in CHF pairs were unabe to cancel them and got executed at their limit price during the drop.
- People who had positions in CHF pairs were unable to get out and have only been allowed to do so at the bottom when they enabled trading again, which is the main real cause of this big negative balances.
(There have been the alternative: Some brokers continued to quote CHF pairs and amended the trades afterwards. CMC markets seems to have done that for example)

2) The fact that some spiked the CHF pairs very low, triggering margin calls at amazing prices. You can argue that those who shut down everything didn't usually have this problem. (IC markets is the best known with this issue)

All the brokers which behaved badly will argue it's due to "liquidity". Which, if we are honest, is probably a part of the problem, but not in the extend they want you to believe.
If you want to choose a good broker, the best way is to look at a 1 minute chart of EUR/CHF and USD/CHF on 15 january if you are able to. If trading was NOT stoped and price didn't go to ultra low quotes (unless corrected afterwards) and broker didn't cheat customers by negatively correcting trades after, you are seeing a nice broker.

Pepperstone belongs to the first issue: They stopped everything for more than 1 hour, and wiped out all accounts of customers being short CHF while filling limit orders of those wanting to sell CHF. I would stay away from them because of that. Oanda did the same, and managed to wipe out my 30K account with a position of 1.6 lots (1.6 !!!) because they "halted" CHF pairs. They managed to let me end with a negative balance, and it wasn't really what I would call an overleveraged account.

The best broker I found where there isn't a single gap in the feed and trading continued the whole time while not going too low is INTERACTIVE BROKERS. If you search a more retail broker, FxPrimus seems to be not too bad with this issue. There are gaps, but you could enter or exit CHF trades with a little slippage.