10:58 pm ET
Sep 22, 2013


Australian FX Broker Pepperstone Mulls Options After Rejecting Bids

    • I thought AXI Was the biggest at 80 billion per month.

      Not sure how accurate these stories are

    • Here are some facts regarding Pepperstone, the industry and this article.

      1. Axitrader is the biggest forex broker in Australia by volume ($80 billion per month), staff, revenue and profits. Investment trends recently published an industry report confirming this. Leaprate and industry related publication also confirmed this.

      2. Pepperstone started out as a whitelabel of Axitrader, they still execute some of their business through Axitrader. Pepperstones remaining business is executed through “Advanced Markets” who act as a 2nd tier prime broker for those who do not have the balance sheet to deal with a Prime Broker directly.

      3. Axitrader have a prime broker “Morgan Stanley”, prime brokers require a minimum of $5 mill in share capital on a company’s balance sheet. Pepperstone do not have a direct Prime Broker relationship, but instead they use a second tier prime broker. If Pepperstone were so large why don’t they have a direct Prime broking relationship like Axitrader?

      4. Whilst Pepperstone were a full whitelable of Axitrader they made claims stating they were the “largest forex broker in Australia”. Practically it is not possible to be larger than the company providing your liquidity, in this case Axitrader.

      5. Pepperstone made public statements to their Introducing Brokers declaring that they were not a whitelabel of Axitrader. The website “Forex Industry Insider” later revealed that what Pepperstones claimed to be their servers were actually owned and managed by Axitrader.

      6. Pepperstone does not make their balance sheet available even upon request.

      7. This article claims that Pepperstone claims have forecasted earnings of $60 million in 2014. This equates to revenue of $5 million per month ($60 bill / 12). The fact is Pepperstone charge their clients $3.50 per lot (100,000) or $7 per lot round turn (buying and selling = 2 x 100,000). If one does the math to work out how much turnover is required to generate $5 million in revenue with commission income being $3.5 per lot Pepperstone should actually be turning over $142 billion not $71 billion stated in this article.

      So let’s analyse this further, take the aforementioned numbers and work backwards by dividing $71 billion by 100,000. This equals 710,000 and happens to be the number of lots Pepperstone claims to trade each month. Now let’s multiply this by $3.50 (the amount Pepperstone actually charge as outlined on their website) we get $2,485,000 or $29,820,000 in yearly revenues. This almost exactly half of the amount stated in this article.

      Pepperstone charge $3.5 per lot not $7. If you work the maths based on $7 the numbers stack up but we know Pepperstone don’t charge $7 per lot, they charge $3.50, and this is very clear on their website.

      It looks like their CEO slipped up on his maths when he was calculating the numbers to give to the journalists. One must ask the question how the CEO could make such a significant error in his calculation.

      8. Pepperstone pay their Introducing brokers $2 per lot round turn, that is $1 per lot for buying and $1 for selling, further eroding their revenue. Again this is public information available on their website.

      These are the facts, you be the judge as to how accurate the information in this article is.

    • Some of the information in this article seems highly questionable. Pepperstone is definitely not the biggest fx broker in Australia. They have been claiming to be the biggest 12 months after they started business, their claims are a bit far fetched. I event saw them at the Melbourne traders and investors expo in 2012, they had 2 people on their small stand and even then their sings on their stand said they were the biggest in the Australia, none of the big boys like Axi, Go Markets or IG Markets ever make such claims.

      Claiming to be the biggest and publishing questionable number seems to be their marketing strategy, after all I have never seen them in a magazine or on any of the popular forex websites.

      Someone should ask for their balance sheet or even do a full audit of their operation. I bet ASIC would be interested in the results.

    • The Forex Magnates Q3 2013 Quarterly FX Industry Report ranks Pepperstone as #1 in Australia and #11 in the World. Sounds like these commenter's work for Axitrader.

    • Volumes in forex can not be verified because forex is not exchange traded, it relys on the company being honest and not double counting.

      Given Pepperstone has a proven track record of lies I would not put it past them to have lied to this journalist as well as forex magnates. This gives this article zero credibility.

    • I have to agree with all of these posters. Pepperstone have a habit of making things up just to get more clients and press coverage. There is allot of on line evidence to say that they are not the major player in Australia. Both Axitrader IC Markets are far more popular in the forums and have much better feedback.

    • The highest paying Forex Broker o its introducing brokers is actually FX International Markets from Bermuda. They $50 per $1 Million in volume, this is $100 per $1 Million round turn. They can even increase the payout for every High Frequency Trading/Money Management clients of introducing brokers.

    • They got banned in Japan by the JFSA but still take Japanese clients. ????

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