Is Pepperstone a True ECN Broker?

Sandy: Based on the article, the criteria that the author writes on the ECN account is to be fast and provide DOM. I mean in terms of execution speed, is it true that ECN is faster than other brokers? And what's so special about the DOM?

And after all the ECN vs STP debate, for me as beginner, what's more important is which account that is really beginner-friendly?

Samuel Raya: Some ECN accounts with real ECN brokers are not even required. Therefore, ECN provides very fast order execution. Meanwhile, STP often occurs requote status if you compare with ECN account. And meanwhile, about Depth of Market (DOM) it is a feature that allows you to see real market conditions and even view another trader's position in Forex Trading.

For more information about ECN, you can read at this article : What are ECN Brokers?

Jimmy carter: Yes, I have the same opinion as you. In fact, based on Pepperstone's statement, it is clear that Pepperstone confirms that they are not a Dealing Desk Broker. As such, the opinion that Pepperstone is a Market Maker Broker is not true.

The only possible types for Pepperstone are STP Broker and ECN Broker, but unfortunately Pepperstone does not confirm that it is an STP Broker or an ECN Broker. So based on that, I think Pepperstone isn't sure if it's an ECN broker either. And possible broker types would be STP brokers. And as we all know, STP brokers are the common type of broker we have come across. Almost all brokers are STP.

But whether it's an ECN or an STP, in fact, Pepperstone can provide very similar and 100% identical functionality to what ECN Brokers typically offer.

Actually, True ECN brokers typically have the following characteristics:

• Direct access to interbank liquidity
• Transparent pricing with no requotes or price manipulation
• Tight spreads, typically starting from 0 pips, but may vary depending on market conditions
• Depth of market (DOM) data showing the best bid and ask prices
• Straight Through Processing (STP) order execution, meaning orders are executed without dealer intervention

The problem that also stated in the article is Pepperstone claims to be an ECN broker, but they have not provided clear evidence to support this claim. Some traders have raised concerns that Pepperstone may actually be an STP broker, as they have not provided evidence of direct access to interbank liquidity. However, it's worth noting that Pepperstone does offer some features that are typically associated with ECN brokers, such as tight spreads, depth of market data, and no requotes. Ultimately, it's up to individual traders to decide whether they believe Pepperstone is truly an ECN broker or not based on the available evidence.

Additional information : If you want to find the brokers that stated they are really true ECN , you can read in here : Which Brokers Are True ECN?

Yes, you are right about the very similar functionality to the ECN Broker at Pepperstone. I mean there is market depth and no requotes which means you can always find it at STP Brokers. It should be noted that the Razor type account offered by Pepperstone has ECN functionality and as a Pepperstone user I have not had any problems trading with them. Spreads can also be very low and start from 0.0 pips. As you said, individual traders decide whether Pepperstone is ECN or not, and I agree that Pepperstone is ECN broker.

a market maker is a type of broker that creates and manages a market for financial instruments like currency pairs, stocks, and futures contracts. They do this by giving both a buy and a sell price for these instruments, and they make money by charging a spread - which is the difference between the buy and sell prices.

But there's a catch: market makers can also act as the other side of their clients' trades, which means they could have a conflict of interest between what's best for them and what's best for their clients. (Read more about Market Maker at here : Market Maker VS ECN

That's why people are talking more about STP and ECN brokers - because they usually offer more direct access to liquidity providers and are more transparent. This can help avoid conflicts of interest between the broker and the trader.

@Akther Laiman: As far as I know, there are two types of ECN brokers, each with similar advantages or added value. DoM features and his ECN price. Here's a quick explanation.

DoM or Market Depth is one of the features that absolutely must be present if a broker is his ECN broker. You can see the market without hiding anything!! If a broker cannot provide this feature, we can say that it is a fake ECN broker for him. Why is there a DoM function? Because a major liquidity provider broke the used ECN.

As for pricing, some offer Raw Zero while others offer low spreads. But the fee here is that most ECNs charge a round fee, half the fee when entering a position or opening a position, and the rest of the fee after closing. 

@Ashike Shaha: Hey there! When it comes to fair and transparent trading, Pepperstone goes the extra mile to provide a secure environment for its clients. They are regulated by top-tier financial authorities like ASIC and FCA, which means they have to meet strict industry standards. These regulations ensure that Pepperstone follows best practices, keeps client funds separate, and undergoes regular audits.

To prevent conflicts of interest, Pepperstone operates as an ECN broker. That means they don't act as the counterparty to your trades. Instead, they connect you directly to liquidity providers, ensuring a level playing field without any interference.

When it comes to client fund protection, Pepperstone takes it seriously. They keep client funds in segregated accounts with trusted banks, keeping them separate from the broker's operational funds. Plus, they offer negative balance protection, so you won't end up owing more than what's in your account.

@Leandro: Hey there! With an STP account, you can enjoy fast execution because your orders go directly to the liquidity providers. The only thing to keep in mind is that the spreads might be a bit wider since the broker adds a small markup for their profit. But if you go for an ECN account, you'll have access to a bigger pool of liquidity, including banks and financial institutions. That can lead to tighter spreads, but keep in mind that you'll pay a commission for each trade.

To decide which account type is best for you, In my opinion, we need to think about what matters most. If speed is your game and you're okay with slightly wider spreads, go for STP. If you want deeper liquidity and don't mind paying a commission, ECN might be the way to go. Take your time, consider your trading style and preferences, and maybe even try out a demo account to see which one suits you best. Pepperstone offers both options, so you've got some flexibility.

Good luck with your trading journey!

@Lineker: I disagree! If we choose the wrong ECN broker, it can actually be a big problem, even if their trading fees are cheaper and their service seems satisfactory. The choice between ECN and non-ECN accounts does matter, especially for part-time or full-time traders. Features like Depth of Market (DOM) can provide valuable insights into market liquidity and help with making informed trading decisions. Additionally, ECN accounts often offer tighter spreads, which can be advantageous for traders seeking competitive pricing.

While safety is certainly important, it's essential to consider other factors as well. ECN brokers are known for their transparency and direct market access, which can enhance trading efficiency and reduce the likelihood of conflicts of interest. On the other hand, non-ECN brokers may have a dealing desk model (DD) where they act as the counterparty to trades, potentially leading to executions or biased practices.

Based on the way the broker processes client orders, there are 2 main categories that need to be considered, namely DD (Dealing Desk) and NDD (Non-Dealing Desk). The DD type of forex broker is also often referred to as a bookie broker, while globally, another name for a DD type broker is Market Maker.

A dealing desk forex broker is a type of broker that acts as the party that executes trader orders within their own company. When you open a trading position, your order will be executed by the platform, and it become your transaction counterparty.
Thus, it could be said that the DD broker has a market that he created himself. Standard bid and ask prices at DD brokers do not reflect actual market rates but are set according to company policy. In this case, the Dealing Desk broker will profit from the spread which is the difference between the bid and ask prices.
By contrast, a Non-Dealing Desk (NDD) is a business model where a broker acts as an intermediary between traders and the live market. NDD brokers do not have an internal trading desk, so traders' orders are executed directly through the liquidity network with prices sourced directly from external liquidity providers.

Even though trading with the NDD broker model often causes slippage, I still like this type of model because I don't need to compete with the broker itself for trading purposes.

That's true,,, for beginning traders, it is not easy to compete with Market Maker. yeah, unfortunately, it relies on your choice. But I am willing to convey some opinions to select among them.
If you want fast and direct order execution, you might choose Dealing Desk. However, if you prioritize price transparency and execution through an external liquidity provider, NDD could be a better choice. read No Dealing Desk (NDD) Brokers, Are They Right for You?

If you are a scalper or trader with a short-term strategy that is very sensitive to slippage, you may prefer NDDs that offer direct access to the market and lower spreads. However, if you trade medium to long term, DD can provide advantages such as protection from extreme volatility.
Check the fee and commission structure of each model. DDs usually offer fixed spreads or wider spreads with hidden transaction costs, while NDDs usually offer variable spreads with separate commissions.