Exclusive: Pepperstone Shuts Down Japan Services as IPO Grows Imminent

One of Australia’s largest FX and CFD brokers is pulling out of Japan and re-focusing on regions where it is

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One of Australia’s fastest growing and largest retail FX and CFD brokers, Pepperstone Financial, has just announced the firm will no longer accept new Japan-based clients as of today.

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The broker announced its intention via an email sent to all of their Japan-based clients earlier today. In the email, the company writes: “Pepperstone does not currently hold a license issued by the JFSA and we have therefore decided that we can no longer service Japanese residents until such time as we hold the appropriate license issued by the JFSA.”

As of today, Peppersone’s Japanese language website will also be removed. Existing clients have been set a date of 31st of December, 2014 to unwind and close all open positions.

Onwards and Upwards

Turning over approximately $70bn per month in FX transactions and ranking in the Top 10 largest retail brokers globally, the firm is looking to take all the appropriate steps in order to list publicly later this year.

In an exclusive interview with Forex Magnates, Pepperstone’s CEO, Owen Kerr explained, “We deem it not appropriate to provide services to Japanese clients without holding a financial services license in Japan.” Adding, “This move is part of a broader plan that we have undertaken to ensure compliance in material jurisdictions in which we operate. It is essential for any multi-national broker to respect local regulatory rules.”

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In parallel, Pepperstone has strategically acquired a financial services license from New Zealand’s Financial Markets Authority (FMA) allowing the firm to offer trading services in New Zealand with a fully regulated status. The license was officially approved earlier this week according to Mr. Kerr.

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‘Pepperstone Financial CEO, Owen Kerr (left) and CFO Joe Davenport (right)

An IPO has been rumoured to be the firm’s future direction for several months, amid a broader industry trend. The firm’s operational changes in recent weeks and months could be an indication that with Pepperstone standing on the precipice of becoming a public company, it wants to optimise all aspects of its business in order to present the best possible offering to investors in the forthcoming IPO.

Pepperstone has appointed UBS and Citibank as co-lead managers and underwriters for the IPO to be made public later this year. Mr. Kerr also revealed that given Pepperstone’s strong performance and growth over the past few years it has allowed the broker to “actively consider acquisitions in Europe to facilitate growth in the region.” The broker made a successful foray into the Chinese market in 2013 and currently derives approximately 15% of its total revenue from China.

Forex Magnates will bring readers exclusive reports of Pepperstone’s IPO expected to be finalised before the end of 2014.

Not the First Ones

Pepperstone’s decision to exit the Japanese market follows on the heels of its close competitors taking similar steps. Only this week, FXCM Japan announced plans to cease offering services to Japanese retail clients in part due to regulatory changes and leverage restrictions imposed by the JFSA. Earlier this year, the Japanese FSA (JFSA) issued a warning to Australian brokers and was reportedly liaising with ASIC on a senior level regarding prohibiting Australian broking firms from operating in Japan without a local license.

Pepperstone admitted in an official statement, “We may look to obtain a license in Japan in the future, however, in the meantime we are focused on being fully compliant with the Japanese regulatory system.”

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