Pepperstone has started a transition process for all its European clients. The company has given its customers which are based in the European Economic Area (EEA) until the 8th of September to close their positions.
The Australian subsidiary of the brokerage will no longer be providing services to European clients as the firm’s FCA-regulated subsidiary takes over. The company is citing “regulatory obligations” for the transition.
Commenting to Finance Magnates, the CEO of Pepperstone APAC, Phil Horner, stated: “Currently we are focused on migrating all our EEA clients from Australia (ASIC license) to the UK (FCA license). This process will take around 3-4 weeks.”
“So far we’ve had a really positive response from clients since getting back open and resuming our operations in Europe,” Mr Horner elaborated.
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UK Subsidiary Reopened after Compliance Issues
The changes partially explain why Pepperstone chose to temporarily close its subsidiary in the UK earlier this year. If the company was on-boarding EEA clients via both its ASIC and FCA-regulated subsidiaries, the UK regulator might have stepped in, urging the brokerage to make a transition.
On its website, Pepperstone explains in a FAQ to clients: “As part of re-commencing Pepperstone UK operations, we are required to close all client accounts held with our Australian entity, Pepperstone Group Limited.”
The accounts of European clients that have been registered with the Australian subsidiary of Pepperstone will not be migrated. Instead they will be permanently closed and customers will have to submit new applications under the FCA-regulated subsidiary. The company has given clients two weeks to close down their positions, ending September 8th.
Pepperstone’s clients will be able to open new positions until the end of this week before the system is switched to close-only mode. Trading conditions for all clients will remain unchanged.
Customers of Pepperstone will also need to pass an appropriateness test in compliance with MiFID regulations.