Is Pepperstone An ECN Broker?

The Pepperstone Group is a no dealing desk broker offering straight-through processing (STP) resulting in ECN broker spreads. An ECN stands for ‘Electronic Communication Network’ which is how liquidity providers and banks interconnect which makes Pepperstone technically not an ECN broker but its infrastructure allows for execution speeds and spreads to be equal to an ECN environment. The broker is not a market maker, which means they are not your counterparty for your trades.

Pepperstone Raw ECN Spreads Razor Account


Our Rating

The overall rating is based on review by our experts

9.17
Spreads
10 / 10
Leverage
10 / 10
Trading Platform
10 / 10
Risk Management
7 / 10
Range of Markets
8 / 10
Customer Service
10 / 10

Pepperstone ECN Spreads

Below compares Pepperstone spreads to other leading ECN brokers. It shows average spreads (not spreads starting from) which is the most accurate way to compare brokerage. Across most currency pairs in 2021, Pepperstone has the lowest spreads as shown below.

Pepperstone Spread Comparison
0.09 0.17 0.27 0.30 0.35
0.02 0.17 0.27 0.30 0.25
0.10 0.20 0.50 0.40 0.40
0.20 0.20 0.40 n/a 0.30
0.44 0.42 0.40 0.30 0.83
0.17 0.30 0.54 0.68 N/A
0.20 0.40 0.50 0.70 0.70
0.10 0.50 0.60 0.80 1.10
n/a 0.50 0.60 0.40 0.60
0.27 1.00 0.73 0.50 1.03

Data taken from broker website. Accurate as at 01/09/2021

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Pepperstone’s ECN Account Was Ranked #1

While there are several other ECN Australia forex brokers, a survey of 13,000 investors and forex traders found Pepperstone to be the best when compared with some of the largest forex and CFD providers like IG Markets, FXCM, and OANDA. They are the best due to key requirements such as execution speeds, platform reliability, customer service, prices achieved and ease of use. These are discussed further below.
Pepperstone Investment Trend Awards

1) Execution Speeds

Advanced forex trading requires on-the-spot pricing with minimal lag and fast execution speeds. To achieve this, Pepperstone partners with the Equinix data centre (a publicly listed company). These servers are located in New York and London near the largest and most important forex liquidity pools in the world. This reduces lag time by minimising distances.

Equinix ECN Forex Broker

As these servers are located overseas, there is still a requirement to get this data to Australia. To achieve this, Pepperstone uses optical fibre to connect Equinix servers (IC Markets is another broker that does this). Compared to conventional internet, optical fibre maximise transfer speeds cutting latency across the network. This optical fibre is also connected to several other areas of the internet to ensure data is passed to the traders at maximum speeds.

Pepperstone also allows the use of VPS (Virtual Private Servers) hosting. This can be a key requirement of algorithmic automated strategies.

2) Platform Reliability

Pepperstone-Australian Forex PlatformsA forex broker must use a mainstream forex trading platform with proven performance over several years. It’s for this reason that Pepperstone didn’t create their own proprietary platform, rather they adopted the three most popular platforms. These are MetaTrader 4 (MT4), MetaTrader 5 (MT5) and cTrader. The great thing about these platforms is that you can use these on your computer on Windows and Mac, Webtrader compatible across all browsers along with Android and iOS apps for Mobile trading.

Both these platforms allow for expert advisors (automated) traders or manual trading straight from charts. As the chart on the right highlights, Trader is not suitable for those who prefer a Mac over a PC. Many forex brokers like Axi, easyMarkets, GO Markets, and Plus500 also don’t offer cTrader.

A few advanced features of cTrader include adjustable session times, detachable charting options, depth of market functionality and cloud-hosted profiles. MetaTrader 4 on the other hand key advanced is access for Pepperstone users of historical data, ideal for backtesting of algorithms/programs.

3) Prices Achieved

Pepperstone offers Pepperstone Price Improvement (PPI) technology to capitalise on improved prices if the market moves in your favour. The way it works is that in-built technology fills an order at the more favourable level when a higher (improved) price can be filled. The process is:

Step 1

The forex traders trades normally and places trade at market prices through either MT4 (MetaTrader 4) or cTrader forex platform.

Step 2

The market price moved in favour of the traders between the time the order is placed and the executed time.

Step 3

The PPI technology detects that a favourable movement in the price has occurred. When possible, the price is then filled not at the order price but at the executed price. This is not a re-quote but rather an improved price only when the market moves in the favoured direction.

4) Active Trader Program

Pepperstone’s ECN account caters to active traders like scalpers, EAs and high-frequency traders. If you are an active trader, Pepperstone clients can get cash rebates and save a portion of the commission paid. Pepperstone will pay back into your trading account AUD $1 per 100,000 units traded up to 500 lots. The Australian-based broker offer rebates in a three-tier system based on the monthly trading volume. Obviously, active traders with higher volume will get the chance to save more on trading commissions.

The typical monthly rebates are around USD 200 – 500, translated into 15% less trading costs (see table below). Active traders with over 500 lots per month generated over at least a 3-month period are advised to contact customer support to negotiate a preferential treatment.

Forex Cash Rebates

Please take note that the Active Trader program doesn’t come with a negative balance protection policy. The good news is that there is no minimum initial deposit to qualify for the Active Trader program.

The key features of the active trader program include:

  • Higher leverage ratios
  • Dedicated relationship Manager
  • Large size execution
  • Credit facilities
  • Premium rewards and access to exclusive webinars

View Pepperstone Review >>Visit Pepperstone >>

How To Get ECN Trading With Pepperstone?

There are two different trading account types for any Australian forex trader with the Melbourne based Australian Pepperstone Group:

YouTube video
  1. Standard
  2. Razor

The first option ‘Standard account’ offers a standard trading experience with Pepperstone quoting prices based on the market. Spreads are wider with this account to allow for an income stream for the Australian forex broker. The second option ‘Razor account’ was the basis for this ECN Pepperstone Review, as this account offers a true ECN trading experience for forex traders through their very own Pepperstone account. This account offers access to Inter-Bank liquidity pools through leading third-party servers, which ensures fast, flexible, fast execution speeds in lots of 0.01. All these features make Pepperstone one of the best forex and CFD brokers traders choice with no dealing desk and is a good option for scalping and hedging.

Choosing either of these retail investor accounts doesn’t just allow you to trade Forex currency pairs such as EUR/USD, GBP/JPY, AUD/USD and other currencies such as NZD, CHF, SGD, HKD  and CAD but is also good for trading CFD of other types. Other CFD types include cryptocurrencies such as Bitcoin, commodities, indices and stocks.

Note: crypto trading is no longer permitted in the United Kingdom due to regulatory requirements of the Financial Conduct Authority (FCA).

To open an account, there is a minimum deposit of $200 and you can deposit funds into your account using a range of funding methods such as bank transfer, credit cards (Visa, Mastercard), debit cards, Neteller, Paypal, Skrill, BPay, Poli and Unionpay.

View the Pepperstone razor account vs standard account page to compare the two options offered by the broker.

The spreads for Razor traders are set by the market with a commission instead been the source of revenue for the Australian forex broker. cTrader commission is determined by the currency pairing rather than the base currency of the trader’s account. The rate for cTrader is 7 units of the first quoted currency. An example is AUDUSD which will cost AUD 7 in commissions. MT4, on the other hand, has flat commissions no matter what major currency pairing is traded.

View Pepperstone Review >>Visit Pepperstone >>

Understand The High Risk Of Forex Trading

It’s critical to seek independent advice before forex trading. This is due to leverage amplifying profit or losses providing risk to your capital. Personal circumstances may align to your level of leverage, which can be trialled through a demo account. Make sure you sign up with a broker that’s overseen by a top-tier regulator like Pepperstone. Pepperstone is regulated by seven financial authorities:

  • Australia – Australian Securities and Investments Commission (ASIC)
  • The UK – The Financial Conduct Authority (FCA)
  • Dubai – The Dubai Financial Services Authority (DFSA)
  • Europe – The Cyprus Securities and Exchange Commission (CySEC)
  • Germany – The Federal Financial Supervisory Authority of Germany (BaFin)
  • Kenya – The Capital Markets Authority (CMA)
  • Global – The Securities Commission of the Bahamas (SCB)

Ensure you fully understand the information you’ve read, double-checking it with the individual broker’s website.

About the author: Justin Grossbard

Justin Grossbard has been investing for the past 20 years and writing for the past 10. He co-founded Compare Forex Brokers in 2014 after working with the foreign exchange trading industry for several years. He also founded a number of FinTech and digital startups including Innovate Online and SMS Comparison. Justin holds a Masters Degree and an Honours in Commerce from Monash University. He and his wife Paula live in Melbourne, Australia with his son and Siberian cat. In his spare time, he watches Australian Rules Football and invests on global markets.