EUR/USD 
155.380 +0.01%
Dedicated FREE FOREX VPS
GBP/USD 
Free FOREX Virtual Private Server
AUD/USD 
MT4 Demo Contest, Get $500
Sign Up for an Account, Claim 60% Deposit Bonus
Free MT4/MT5 VPS 2024
Send E-mail and Get Free Merchandise
IDX 7,155.29 -0.27%
Maximize Your Earnings with 100% Deposit bonus
Trade to Win, $5,000 Monthly Demo Contest
Bitcoin 64,276.90 -3.21%
Ethereum 3,139.81 -2.49%
Litecoin 83.16 -2.29%
Pepperstone can be categorized as an ECN broker with a no-dealing desk policy, though not necessarily a true ECN broker.
Pepperstone is one of the most well-known Australian-based brokerages. Famous for its Razor account, which offers institutional-grade variable spreads as low as 0 pips, Pepperstone has become a favored choice for international traders. However, potential traders may wonder: Is Pepperstone a true ECN broker?
Pepperstone can be categorized as an ECN broker with a no-dealing desk policy, though not necessarily a "true ECN broker". Read on for a detailed explanation.
Mixed Netizens' Opinions
When you are looking for the answer through search engines, you may find conflicting results from multiple sources. Some say, "Yes, Pepperstone is a true ECN broker". Some others say "No, Pepperstone is an STP broker".
Well, the answer is not so straightforward due to some very technical reasons.
First, Pepperstone offers two types of accounts. One of which is an STP, while the other follows ECN standards.
Second, Pepperstone relies on an innovative STP framework to produce ECN pricing. The framework belongs to the STP category, but is unique in its own way. As such, the answer to the question of "is Pepperstone a true ECN broker?" will be highly dependent on what you consider a true ECN broker.
Pepperstone's Official Statement
Pepperstone addressed this contention in their website's FAQ section. Here's a direct quote from the 28th of January, 2023:
"Is Pepperstone an ECN/STP trader or market maker? We're often asked this question. Part of the difficulty in answering it is the fact that 'ECN' and 'STP' are marketing terms taken from a listed market regime and different providers in the industry give them different meanings.
A 'true ECN' or STP broker is an introducing broker or a broker who operates using someone else's system under a white label arrangement.
We're the issuer of the products that we provide and we have control over the systems that we use, because our preference is for our clients to have a direct relationship with us.
That said, we could be considered to be an 'ECN' broker in that we don't run any proprietary trading book. By contrast, we source our pricing from external Liquidity Providers (pricing isn't provided by us or from any one related to us) via an electronic communication network, and this pricing is passed on to you and our other clients without a dealing desk intervening.
Hedging each individual transaction creates more chance of something happening to the second limb of the trade, which impacts the first. For this reason, we don't hedge each and every position with our external Liquidity Providers, because we want to provide you with a better product by giving you price certainty and speed in terms of how we deal with you. Please be assured that we take our risk management practices very seriously and closely monitor our exposure to ensure we are not exposed to excessive risk.
We consider a 'market-making broker' to be someone who operates a dealing desk and creates their own prices, which can be based on their own proprietary trading positions or risk exposure. We don't currently operate in this manner, so although we have market-making authorisations on our AFS Licence (like every other licensed product issuer in Australia), we don't consider ourselves to be a market maker."
TL; DR, Pepperstone admitted that they are an ECN/STP broker and not a market-maker. At the same time, they did not state clearly whether they were an STP or ECN broker.
Pepperstone was founded in 2010 by a team of experienced traders with a shared commitment to improve the world of online trading. Based in Melbourne, Australia, they grew to become one of the largest forex brokers in the world. If traders want to find a broker that provides low spreads, fast execution, and award-winning support, then the answer is Pepperstone.
Pepperstone has a strong legality guarantee because it has been licensed by the Australian regulator ASIC and FCA. Traders' funds can be deposited in segregated accounts at top Australian banks, one of which is the National Australia Bank (NAB). Therefore, the safety of funds is not a concern if a trader chooses to open an account in Pepperstone.
They succeeded in collaborating with 23 top banks to bring Bid to investors instantly via optical fiber. This allows all orders to be executed 100 percent automatically with low latency up to 0.05 milliseconds, without dealing desk intervention and requotes, as well as with super low trading costs.
Trusted by over 73,000 traders around the world, Pepperstone processes an average of USD12.55 billion of trading volumes every day. Because of that, they have many awards such as:
- The Best Global Forex ECN Broker 2019 and Best Forex Trading Support-Europe
- Best Australian Broker and Best Trading Platform 2018 by Compareforexbrokers.com
- Best Forex ECN Broker, Best Forex Trading Support, and Best Forex Trading Conditions by UK Forex Awards 2018
With the many rewards gained, Pepperstone hopes to attract more and more traders from all over the world. The rising performance of Pepperstone is not only due to the super-tight spreads and fast execution that it provides, but also because many traders are interested in trading with deposits in currencies other than US Dollars.
For this reason, Pepperstone is one of the most market-responsive brokers because it is willing to accept deposits in 10 currencies, which include AUD, USD, EUR, CAD, GBP, CHF, JPY, NZD, SGD, and HKD.
Trading in Pepperstone would allow traders to choose between 11 trading platforms: MT4 for desktop, MT4 Mac, MT4 iPhone, MT4 Android, MT4 iPad/Tablet, MT5, WebTrader, cTrader WebTrader, cTrader cAlgo, and cTrader Mobile. The choice of trading platforms may seem confusing to novice traders, but actually, it is very useful because it has fast execution.
When trading forex, traders can enjoy raw spreads from 0.0 pips on Razor accounts, over 61 currency pairs, and commission-free account funding on a wide range of deposit options. In addition to currency pairs, Pepperstone provides many types of trading instruments, including CFDs for indices and shares, commodities, and cryptocurrencies.
Instruments in commodity trading are pretty much diversified. Not only metal, gold, and silver, but traders can also trade with soft commodities such as cotton, sugar, coffee, cocoa, and orange juice. Pepperstone also provides trading on energy (oil and gas).
There are two types of accounts provided by Pepperstone, namely Razor accounts, and Standard accounts. If you area beginner, it is recommended to choose a Standard account with an average EUR/USD spread of 1.0-1.3 pips and free commission.
Those with particular trading styles such as scalpers and algorithmic traders may enjoy the lower cost setup traditionally seen in a Razor account, with a commission from AUD7 round turn of 100k traded. You can start trading with a minimum lot of 0.01 (micro) and 1:400 leverage.
As a Pepperstone client, a trader can fund and withdraw with alternative methods including Visa, Mastercard, POLi internet banking, bank transfer, BPay, PayPal, Neteller, Skrill, and Union Pay.
If you are new to trading or looking to practice your trading strategies in a risk-free environment, you can create Demo Account in Pepperstone. But if you are an experienced trader or prefer to learn by doing, Pepperstone provides a Live Account that allows you to trade with live executions and pricing.
Traders can also follow and copy strategies from popular traders using third-party services while learning how to improve their trading abilities. Pepperstone has partnered with a range of social trading platforms that traders can choose from, such as Myfxbook, ZuluTrade, Mirror Trader, MetaTrader signals, and Duplitrade.
Why We Can Consider Pepperstone an ECN Broker
Traders usually choose ECN brokers to obtain three important features: lowest spread, fast execution, and transparent pricing through Depth of Market (DOM). We can consider Pepperstone an ECN broker because they offer all three on Razor accounts, even though they do not operate on an ECN framework.
Pepperstone provides two types of accounts (Standard & Razor) and three types of trading platforms (cTrader, MT4, & MT5). The Standard account is an STP-type trading account with zero commission fees and an average spread of 0.8 pips on EUR/USD. However, the Razor account perfectly mirrors an ECN account.
Pepperstone's Razor account promises institutional-grade spreads with zero markups. The average spread on EUR/USD can be as low as 0.0–0.3 pips. Most orders are executed in less than 30 milliseconds (based on the time taken to process orders once they are received in Pepperstone's bridge). You can also access DOM functionality on cTrader and MT5.
All of that does not come cheap. But Razor account's commission fee is not the most expensive in the industry. It was just AUD$7 per round turn per 100k traded (may vary based on your preferred platform and base currency). All in all, we can choose Pepperstone's Razor account as an ECN account that is suitable for scalping and algo-trading.
Pepperstone is an award-winning broker offering various trading instruments including forex, CFD, and crypto. This Australian broker is regulated by the Australian Securities and Investments Commission (ASIC).
23 Comments
Sandy
Jan 29 2023
Thanks for the article! I encountered a few cases like the article. Many of my friends also suspect Pepperstone as an ECN broker because Pepperstone itself has never confirmed whether they are ECN or not. And even Pepperstone admits that they are an STP or ECN broker. I mean, maybe ECN brokers need more terms to make sure they are ECN broker.
But I think we have to forget about STP or ECN as long as they are not a market making broker. In my opinion, I have come to the same conclusion as the author. If prices and commissions reflect ECN trading conditions, then we can say that Pepperstone Razor is an ECN account and Pepperstone is an ECN broker after all.
Samuel Raya
Jan 29 2023
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?
Suarez
Jan 29 2023
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
Jan 29 2023
What an article! I mean this can be controversial as many affiliates claim ECN status at Pepperstone. As I know, ECN brokers are also secondary liquidators and in other words, they cannot provide STP services. I mean why is ECN Broker providing STP service because you are liquidator and another STP broker also send order to ECN.
And about the fee, if ECN provides STP service, that means ECN will send order back to STP and STP will send back to ECN. What I mean is that the spread will be very expensive for the trader because it through many broker. So in my opinion, Pepperstone is not an ECN broker, just an STP broker with ECN conditions. Here's my opinion of the state of Pepperstone.
Harry Winks
Jan 29 2023
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.
Alvarez
Mar 19 2023
I agree with the comments below that the situation with Pepperstone is a bit controversial since they haven't clarified whether they are STP brokers or ECN brokers. It's possible that they are STP brokers, as they haven't clearly stated that they are ECN brokers.
As traders, it's important to know the characteristics of an ECN broker, as other brokers may claim to be ECN but charge you high fees without offering the essential features that ECN brokers typically have.
So, my questions are :
Thank you!
Adam
Mar 19 2023
Actually, True ECN brokers typically have the following characteristics:
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?
humin park
Mar 19 2023
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.
Anita
Mar 19 2023
Hey, I noticed a lot of people in the comments section discussing STP and ECN brokers, but nobody has mentioned market makers. As someone who's new to this, I'm curious about market makers. Based on the name, it seems like these brokers create the market, right?
Can you explain what a market maker is and why others are focusing on STP and ECN brokers instead? I'd like to learn more about market makers too despite Pepperstone in this article has stated that they are not market maker broker.
Dominic
Mar 19 2023
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
Apr 18 2023
What are the key characteristics of a true ECN broker, and how does Pepperstone compare to these standards? Specifically, how does Pepperstone's pricing and execution model work, and does it offer true ECN trading conditions with access to deep liquidity and tight spreads? Additionally, what are some of the benefits and drawbacks of trading with a true ECN broker like Pepperstone, and how can traders effectively leverage this type of trading environment to improve their performance in the market?
Billie
Jul 13 2023
@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
Apr 18 2023
How does Pepperstone ensure fair and transparent trading conditions for its clients, and what measures does it take to prevent conflicts of interest and protect client funds? Specifically, what types of regulatory oversight does Pepperstone have, and how does it comply with industry standards for safety and security in the forex market? Additionally, how does Pepperstone's commitment to transparency and client trust set it apart from other brokers, and what are some best practices for traders who want to ensure they are trading with a reputable and trustworthy ECN broker like Pepperstone?
Justin
Jun 11 2023
@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
Apr 21 2023
Pepperstone offers two types of accounts, STP and ECN. While STP accounts provide Straight Through Processing and allow for direct forwarding of client orders to liquidity providers, ECN accounts utilize an Electronic Communication Network to match client orders with other market participants. Is it possible for a broker to offer both STP and ECN account types at Pepperstone, and can you provide a more detailed explanation of the differences between these two account types? Additionally, how can a trader determine which account type is best suited to their trading style and preferences?
Tristan
Apr 23 2023
@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
Apr 21 2023
If we choose the wrong ECN broker, at least if their trading fees are cheaper and we are comfortable with their service, I don't think ECN or non-ECN should be a problem. As a part-time or full-time trader, if we don't need features like DOM, it's better to choose an STP account with ECN specifications, such as tighter spreads. As long as they are safe, I don't care about the type of account. Safety is what matters, as long as it's not a DD market!
Brian Joshua
Jun 2 2023
@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.
Maguire
Apr 21 2023
@Leandro: Yes, it is possible for a broker to offer both STP and ECN account types, and Pepperstone is one example of a broker that offers both. STP accounts, as you mentioned, provide Straight Through Processing, which means that client orders are directly forwarded to liquidity providers without intervention from the broker. ECN accounts, on the other hand, utilize an Electronic Communication Network to match client orders with other market participants, such as other traders, banks, and other liquidity providers. This can provide greater transparency in pricing and potentially lower slippage, but may have higher spreads and may be subject to wider market fluctuations.
When deciding which account type is best suited to their trading style and preferences, traders should consider a variety of factors, such as:
Hopefully it can clear your answer!
Verotino
Jul 15 2023
How does Pepperstone's Razor account manage to replicate the key features of an ECN broker, such as low spreads, fast execution, and transparent pricing, despite not operating on a traditional ECN framework? Pepperstone is recognized for offering two account types, Standard and Razor, along with three trading platforms, cTrader, MT4, and MT5. While the Standard account functions as an STP-type trading account, it is the Razor account that closely mirrors the characteristics of an ECN account. By examining factors like liquidity providers, pricing models, and execution methods, what enables Pepperstone to create an environment on the Razor account that emulates the benefits typically associated with ECN brokers? Understanding these underlying mechanisms will provide insights into how Pepperstone can deliver ECN-like functionality and enhance the trading experience for its clients.
Mereliona
Sep 3 2023
Can ECN be used by beginners like me? Or rather no, to be honest, I have no idea what this article is trying to show. I mean, I don't know what this market execution means or anything and the difference between ECN and other brokers. Sorry to say, I don't understand the difference at all. Why do I need to open an ECN if I can't use it properly? This is just my opinion, but if this doesn't work for trading on an ECN, you would be better off using a regular account the normal way. it's the best option and I think the execution speed is the same between these two accounts.
Futhermore, what about the type of account that offers a Dealing Desk, isn't it good? what is the function of accounts that do not offer a Dealing Desk and those that do? Please explain, to be honest I'm a bit confused, because this term is quite rare for me before.
Vermillion
Sep 4 2023
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.
Ukrain
Sep 5 2023
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.