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Pepperstone: To Sell or Not to Sell the Australian Forex Broker?

The wave of consolidation in the Forex sector is really gathering speed and today the news broke out that Pepperstone, a leading brokerage based in Australia, is considering its options after numerous bids being received. In an interview for Wall Street Journal's MoneyBeat, Pepperstone's chief executive Owen Kerr said that the management of the company is considering different options for its future, including a takeover and an initial public offering. Stricken by the news, we've decided to dedicate an article on assessing the pros and cons of selling the brokerage.


Number one is the fact that if Pepperstone gets bought by a top-tier company, it will get substantial financial support for its expansion – let's not forget that the broker has been rather aggressive in its global growth. And the latter does not concern only its websites (remember the new Japanese website) but also physical expansion: I bet that you recall the opening of a new office by the broker in Shanghai in February this year. 
Another plus is the fact that a new owner of the business may provide the technology necessary for the company to support growing trading volumes and high number of clients. It's not that Pepperstone sucks in terms of execution – the case is exactly the opposite, but as the business grows, so do IT demands.
Another pro would be that the Pepperstone could gain an edge over its Australian rivals. It's a fact that the company has been introducing new products, with the latest addition to its line-up expected to be the cTrader platform. But the broker will still lag behind its Australian peer ThinkForex, as the latter managed to launch the open platform in August.
The last pro is the money: the people who own the business will cash in big time.


Number one is comprised in the simple question: “Why should a business without problems be sold?”. Seriously, we are talking about a Forex brokerage without some grave issues on the agenda. It's true, for example, that the Australian Securities and Exchange Commission (ASIC), which regulates Pepperstone, has tightened its grip over the past months. But with its robust capitalization, the broker has no problem in meeting the net capitalization requirements of $500,000. Nor it's supporting any activities like high-frequency trading which have seen a stricter approach by the watchdog lately. Seriously, it's just a stable retail FX business, without any financial troubles either.
Number two is the reaction of retail Forex traders: at a particular moment we can rely on this robust  broker with tight spreads and excellent execution, in the next we are transferred to some faceless corporation, aiming to satisfy its institutional clients. 
I'll conclude on a more personal note, by saying that I hope Mr.Kerr to continue pushing off suitors as he has done until now. 

About Pepperstone Financial

Pepperstone Financial Pty Ltd provides Forex trading capabilities to retail, high-net worth and institutional clients around the world. The company provides access to fair, competitive and transparent pricing across all major currency pairs by equipping traders with best-in-class trading technology and customer service. The company is headquartered in Melbourne, Australia. 
Pepperstone Financial Pty Ltd is a corporate authorised representative, CAR No. 389931 of CDM Pacific Pty Ltd which holds an Australian Financial Services License (AFSL 223682) issued and regulated by the Australian Securities and Investment Commission (ASIC).
TAGS: pepperstone  pepperstone forex broker  pepperstone australia broker  pepperstone takeover  pepperstone ipo  forex consolidation  forex deals  forex strategy  m&a  mergers and acquisitions 

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