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Re:

Pepperstone’s German Entity Holds BaFin Authorization Granted in August 2020

Pepperstone GmbH received its BaFin authorization in August 2020 and is identified under register number 151148. The authorization covers specified investment services, not every Pepperstone entity or customer.
From TheFinanceBase Team6 min to read
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Pepperstone did not receive a new German licence recently. The authorization was granted on 4 August 2020 to Pepperstone GmbH, the broker’s separately incorporated German subsidiary. The company began providing services under that authorization on 30 November 2020 and announced the launch publicly on 9 December 2020.

Pepperstone’s current German-facing website continues to identify Pepperstone GmbH as supervised by Germany’s Federal Financial Supervisory Authority, or BaFin, under register number 151148. That distinction matters: BaFin regulates the German entity and its covered business, not every Pepperstone customer or every company in the wider Pepperstone group.

Which Pepperstone company holds the authorization?

The regulated entity is Pepperstone GmbH, not “Pepperstone” as a single worldwide legal entity. Its published company details are:

Detail Information
Legal name Pepperstone GmbH
Registered office Neubrückstr. 1, 40213 Düsseldorf, Germany
Commercial register HRB 91279, Amtsgericht Düsseldorf
BaFin register number 151148
Legal form German GmbH
Ownership Wholly owned subsidiary of FX MidCo Pty Ltd

Pepperstone GmbH is therefore not simply a Düsseldorf branch office of the Australian parent. It is a German company within the broader Pepperstone group. Customers should check the legal entity named in their account agreement, order documentation and website footer before assuming that the German authorization applies to them.

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Pepperstone’s German imprint and company information page identify Pepperstone GmbH and BaFin register number 151148. BaFin’s own company database is the appropriate place to verify an institution’s authorization and the activities covered by it. BaFin says the database is updated daily.

When was Pepperstone’s German authorization granted?

Pepperstone’s Pillar 3 disclosure gives the authorization date as 4 August 2020. The German entity started providing services on 30 November 2020, followed by Pepperstone’s public launch announcement on 9 December 2020.

That timeline makes “Pepperstone has just been granted a BaFin licence” inaccurate if it is being used to describe a recent event. A more precise description is:

Pepperstone GmbH holds BaFin authorization granted in August 2020.

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The authorization remains identified on Pepperstone’s current German website, but readers should still verify the live BaFin record and the exact legal entity before opening or funding an account.

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What does the BaFin authorization cover?

Pepperstone’s disclosure lists three German investment services:

  1. Contract broking under section 2(2) no. 5 of the German Investment Firm Act, or WpIG.
  2. Investment broking under section 2(2) no. 3 WpIG.
  3. Dealing on own account under section 2(2) no. 10 WpIG.

The stated principal business is onboarding retail and professional clients so they can trade contracts for difference, commonly called CFDs. A BaFin authorization confirms that the entity may provide specified regulated investment services subject to the applicable rules. It does not turn CFD trading into a bank deposit, guarantee profits or remove market risk.

What does the €750,000 figure mean?

Pepperstone’s Pillar 3 disclosure refers to €750,000 of initial capital for the company’s classification as a Class 2 investment firm. This figure is sometimes incorrectly described as the value of Pepperstone’s BaFin licence.

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That wording is misleading. BaFin did not issue a licence “worth” €750,000, and the amount is not a fee paid to the regulator. It refers to the applicable initial-capital requirement for the firm’s regulatory classification.

Does the German entity serve Austria?

Yes. Pepperstone said the German entity was created to serve customers in Germany and Austria, supported by a Düsseldorf-based team. Its regulatory disclosure also describes the listed investment services as being provided in Germany and Austria.

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This does not mean the German entity serves every Pepperstone customer in Europe. Pepperstone operates through several companies and regulatory frameworks, including entities supervised by the FCA, ASIC, CySEC, DFSA, CMA and the Securities Commission of The Bahamas. The customer’s country of residence and contractual account entity determine which regulator, legal terms and protections apply.

What protection is available to customers?

Pepperstone says Pepperstone GmbH is a member of Germany’s Entschädigungseinrichtung der Wertpapierhandelsunternehmen, or EdW, the compensation scheme for securities-trading firms.

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According to Pepperstone’s German customer-funds information, EdW protection covers eligible euro-denominated liabilities to customers at 90%, subject to a maximum of €20,000. This is not the same as ordinary bank-deposit insurance.

Pepperstone also says customer money is held in segregated accounts. Its German information refers separately to statutory deposit protection of up to €100,000 where eligible funds are held by a deposit-taking bank. These arrangements address different risks:

Protection or arrangement What it concerns Published limit or description
Segregated client money Keeping customer money separate from the firm’s own money Segregation does not eliminate investment or counterparty risk
EdW compensation Eligible customer liabilities if the relevant securities firm fails 90%, up to €20,000, according to Pepperstone
Statutory bank-deposit protection Eligible deposits held with a qualifying deposit-taking bank Up to €100,000, subject to the deposit-protection rules

These figures should not be added together and advertised as €120,000 of protection for a trading account. CFD positions are not ordinary savings deposits, and protection depends on the specific failure scenario, account structure and applicable rules.

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Retail leverage under Pepperstone GmbH

Pepperstone’s German FAQ lists the following maximum leverage ratios for retail accounts under the BaFin-regulated entity:

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Instrument Maximum retail leverage
Major currency pairs 30:1
Non-major currency pairs, gold and major indices 20:1
Commodities other than gold and non-major stock indices 10:1
Individual shares 5:1
Cryptocurrencies 2:1

These are maximums, not recommended settings or guaranteed terms for every instrument. Leverage magnifies both gains and losses. A 2% adverse move on a position controlled with 30:1 leverage can consume a substantial portion of the capital supporting that position.

Professional clients may be eligible for higher leverage, but they give up some retail protections. Pepperstone says applicants generally need to meet at least two of three tests involving:

  1. Sufficient trading activity.
  2. A financial-instrument portfolio exceeding €500,000.
  3. Relevant professional experience in the financial sector.

Professional status should not be treated as a free upgrade. The lost protections can matter more than the higher leverage limit.

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What the BaFin authorization does not mean

  • Pepperstone GmbH is not a German bank.
  • Customers do not ordinarily acquire ownership of the underlying shares, currencies or cryptocurrencies when trading the broker’s CFDs.
  • Every Pepperstone customer is not automatically contracted with Pepperstone GmbH.
  • Every Pepperstone product is not automatically covered by the same German arrangements.
  • BaFin supervision does not guarantee profits, execution quality or the solvency of every Pepperstone group company.
  • CFD funds are not protected in the same way as money held in a standard savings account.

Pepperstone’s German disclosures describe the products as CFDs and derivatives and warn that customers do not acquire rights to the underlying assets. Retail CFD risk disclosures and the applicable client agreement should be read before depositing money.

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How to verify the entity before opening an account

  1. Open the German website’s Impressum or legal information page.
  2. Confirm that the named provider is Pepperstone GmbH, with Düsseldorf registration number HRB 91279.
  3. Check that the BaFin register number is 151148.
  4. Search the entity in BaFin’s company database rather than relying only on a broker advertisement.
  5. Read the account agreement to confirm which group company will be your contractual counterparty.
  6. Compare the leverage, compensation arrangements and product restrictions in that entity’s documentation with the terms shown during the application.

FAQ

Did Pepperstone recently receive a BaFin licence?

No. Pepperstone’s disclosed authorization date is 4 August 2020. Pepperstone GmbH began providing services under it on 30 November 2020 and announced the launch on 9 December 2020.

Which Pepperstone entity is regulated by BaFin?

Pepperstone GmbH, a separately incorporated German subsidiary based in Düsseldorf. Its BaFin register number is 151148 and its commercial-register number is HRB 91279.

Is Pepperstone a German bank?

No. Pepperstone GmbH is a German investment firm authorized for specified services, primarily connected with CFD trading. The authorization is not a banking licence.

Does the €750,000 figure mean Pepperstone has a €750,000 licence?

No. The €750,000 figure refers to the disclosed initial-capital requirement for Pepperstone GmbH’s Class 2 investment-firm classification. It is not the price or monetary value of the authorization.

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How much compensation is available if Pepperstone GmbH fails?

Pepperstone says eligible euro-denominated liabilities may receive EdW compensation at 90%, subject to a €20,000 maximum. Separately, eligible deposits held with a qualifying bank may have statutory deposit protection of up to €100,000. These protections are not cumulative and do not guarantee trading profits.

What leverage can German retail clients use?

Pepperstone’s German FAQ lists maximum retail leverage of 30:1 for major FX pairs, 20:1 for non-major FX, gold and major indices, 10:1 for other commodities and non-major stock indices, 5:1 for individual shares and 2:1 for cryptocurrencies.

The Bottom Line

Pepperstone GmbH received its BaFin authorization on 4 August 2020, began operating under it on 30 November 2020 and remains identified by Pepperstone as BaFin-supervised under register number 151148. The authorization covers specified investment services, mainly related to CFD trading in Germany and Austria.

It should not be described as a newly granted licence, a German banking licence or a €750,000 licence. Before opening an account, verify the legal entity in the contract and check the current BaFin register, because Pepperstone’s other group companies operate under different regulators and may offer different protections and terms.

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