Problem ALERT! PEPPERSTONE CLOSED MY OPENED POSITIONS ON THE WEEKEND!!!

[Pharaoh]

Can you answer a hypothetical question for me? If I was trading too heavily on IT40 (whatever that is) and there was some sort of big news event coming up which could affect it, is there any chance my trades could be forcibly closed on a Saturday (i.e. when the markets are closed)? If so, can you point me to the correct part of the client agreement which would cover a close of position while the markets are not open?

 

[4evermaat]

Hello proft.erol,

Looking at the positions you stated, I see that you have already submitted an investigation with Financial Ombudsman Service and as such we need to communicate through this channel going forward.

We believe that Pepperstone has acted within the terms of the client agreement for this dispute and as always, has acted within the best interest of our clients.

Kind regards,

Pepperstone Support

Ok, irrespective of the specific details of the case above, can Pepperstone clarify which terms of the client agreement / PDS allow for this to happen? e.g. that the broker can close a position against client wishes, even if they have sufficient margin and/or the market is closed?

and also from a more technical standpoint, how was it possible? How did you close the trade position while the market was closed?

 

[Jozefntou]

I believe this is in all broker client agreement, but no brokers actually do this. Strange that pepperstone does this though.

 

[4evermaat]

C

I believe this is in all broker client agreement, but no brokers actually do this. Strange that pepperstone does this though.

Can you or pepperstone show the specific line in Pepperstone's PDS that says they can renege open trades?

No latency arb. No margin call. Just close a client's trade arbitrary because you dont "like" it. WTF???

Might as well trade offshore, lol.

 

[Pepperstone Support]

Ok, irrespective of the specific details of the case above, can Pepperstone clarify which terms of the client agreement / PDS allow for this to happen? e.g. that the broker can close a position against client wishes, even if they have sufficient margin and/or the market is closed?

and also from a more technical standpoint, how was it possible? How did you close the trade position while the market was closed?

Pepperstone states our stance on closing our trades in section 14.6 of our Product Disclosure Statement.

This section covers many different aspects of what can happen in a margin call. Importantly it covers when a client fails to meet a margin call (when the account is below 90% margin level) and has not placed further funds in the account so as to withstand any form of adverse gap when the market opens.

Failures to close margin calls are generally handled by the trading platform, but we reserve the right to do this manually in extenuating circumstances.

Kind Regards,

Pepperstone Support

 

[profit.erol]

Pepperstone states our stance on closing our trades in section 14.6 of our Product Disclosure Statement.

This section covers many different aspects of what can happen in a margin call. Importantly it covers when a client fails to meet a margin call (when the account is below 90% margin level) and has not placed further funds in the account so as to withstand any form of adverse gap when the market opens.

Failures to close margin calls are generally handled by the trading platform, but we reserve the right to do this manually in extenuating circumstances.

Kind Regards,

Pepperstone Support

Pepperscam sent me an email that we closed your positions due to abnormal trading conditions which is italy referendum.
I am not stopped out, you closed my positions. So there was no problem about margin requirements.
If there is problem about margin requirement, you have to invite trader to deposit more money. You did not write me to deposit, you just closed my positions on sunday night by sending me an email after you see italy referendum result!

And you sent an email before italy referendum in this link > http://prnt.sc/dlv0ib

You are not saying that please don't use high leverage, there is abnormal market conditions, you just say "FUND NOW" and "TRADE NOW". "Trade your opinion and take advantage of this historic event."
They forgot to write there, "if your opinion is correct, we can decide to close your positions."

And if there is risk in the market for broker, they can reduce leverage for specified products like IT40 or they can change these products to close only mode that you can't open new positions, you can just close your opened positions.
Is it legal solution to close my positions at the weekend without informing me before?
So please pay attention pepperstone can close your positions eventough market is closed. It means they are market maker / B-book broker and scam broker. They are not ECN broker as they wrote in their website.

 

[4evermaat]

Pepperstone states our stance on closing our trades in section 14.6 of our Product Disclosure Statement.

This section covers many different aspects of what can happen in a margin call. Importantly it covers when a client fails to meet a margin call (when the account is below 90% margin level) and has not placed further funds in the account so as to withstand any form of adverse gap when the market opens.

Failures to close margin calls are generally handled by the trading platform, but we reserve the right to do this manually in extenuating circumstances.

Kind Regards,

Pepperstone Support

Thanks for the clarification. I had a chance to read that section and also skim through some other relevant sections. I'm left with more questions than answers.

1) Under a margin call situation, the trader is warned that they must deposit more funds (or close positions) to move their funds above a margin call level. No trades are actually closed

Under a stop out situation, that is when positions are actually closed. Usually one or more positions are closed out with specific logic (e.g. largest loser, last opened trade closed first, etc until positions are brought above the stop out level, or all trades closed out. This is disclosed in the PDS.

According to Section 15.8 (Margin Calls), Pepperstone's Margin level is 90% and Stop level is 20%. You allowed the client to open the positions and hold them until the market closed. But let's say that the market was still open.

If you insisted on wanting to close positions to obtain more margin, you would only need to close enough to bring the margin level back above 90%. Only 1 trade would have needed to be closed to get the required margin.

This tactic of closing trades that were within margin/stop levels in itself is questionable. You advertised and set your margin/stop levels already and did not notify your entire client base of any updated changes. Then, did you give them reasonable amount of time to be able to deposit more funds (again, assuming the markets were still open)? How was this in the best interest of the client?

2) How were you able to close the position while the market was closed?
I think section 18 (Trading Hours) of your PDS covers this.

Wouldn't you have to wait until the market re-opened at least 1 incoming tick to then close any positions? Or if you truly wanted the positions closed, to have closed the positions prior to the market close on Friday?

I would certainly like to see the round-trip, post trade trace report on any such trades. That might provide a more rational explanation as to how such a sequence of events were actually implemented.

Oh, wait. scroll back up to section 8: "What is a CFD Transaction?" 8.1 states

A CFD is an agreement between yourself and the provider (Pepperstone Group Limited) to exchange the difference in value from when the contract is opened to when it is closed. If the value of the CFD has moved in your favour, you will be paid an amount into your trading account, should the value of the CFD move against your position, the value will be deducted from your account.

[emphasis mine].

Rather than jump to conclusions, I would like to see if Pepperstone or anyone for that matter care to demonstrate how a conflict of interest would be avoided in such situations.

 

[4evermaat]

Pepperscam sent me an email that we closed your positions due to abnormal trading conditions which is italy referendum.
I am not stopped out, you closed my positions. So there was no problem about margin requirements.
If there is problem about margin requirement, you have to invite trader to deposit more money. You did not write me to deposit, you just closed my positions on sunday night by sending me an email after you see italy referendum result!

And you sent an email before italy referendum in this link > http://prnt.sc/dlv0ib

You are not saying that please don't use high leverage, there is abnormal market conditions, you just say "FUND NOW" and "TRADE NOW". "Trade your opinion and take advantage of this historic event."
They forgot to write there, "if your opinion is correct, we can decide to close your positions."

And if there is risk in the market for broker, they can reduce leverage for specified products like IT40 or they can change these products to close only mode that you can't open new positions, you can just close your opened positions.
Is it legal solution to close my positions at the weekend without informing me before?
So please pay attention pepperstone can close your positions eventough market is closed. It means they are market maker / B-book broker and scam broker. They are not ECN broker as they wrote in their website.

Can you post a screenshot of the email they sent shortly before or after Pepper actually closed your positions?

Also, can you confirm the appx time was the referendum start and what time the results were concluded? It almost seemed like they closed the trades ahead of the referendum result. Still bullcrap, but that would be amazing [in a faked up way] if they closed the trades after the market closed AND after the IT referendum voting started/finished.

 

[profit.erol]

Can you post a screenshot of the email they sent shortly before or after Pepper actually closed your positions?

Also, can you confirm the appx time was the referendum start and what time the results were concluded? It almost seemed like they closed the trades ahead of the referendum result. Still bullcrap, but that would be amazing [in a faked up way] if they closed the trades after the market closed AND after the IT referendum voting started/finished.

I am adding here their first email in 3 files.
Pepperstone is writing here that there is problem about margin requirement. But as everyone can see, their email subject is trade issue and they wrote that "as a result we are invoking our rights to close out the trading contracts due to the abnormal conditions."
They did not write that you did not deposit money to meet with margin requirements.

They wrote some sections of their terms and conditions about margin requirement etc in order to defend themselves. But they explained in first sentences of the email why they closed my positions.

They also wrote something about negative balance risk. But it is not negative balance risk, it is high profit risk. Because pepperscam is market maker broker which can close positions at the weekend without price and notice. So there is no negative balance risk for market maker brokers.

And they sent this email on sunday 00:00, Italy referendum results was known on sunday night.
So they did this illegal action against my potential profit.

If not, they were able to close my positions after market closing on friday 18:40, because Italy index was closing at 18:40 friday, they have more than 5 hours to close my positions on friday.
If there is margin requirements problem, as you wrote, they have to close my positions till the margin level is equalt to %90. They don't need to close all positions.

 

[profit.erol]

Pepperstone states our stance on closing our trades in section 14.6 of our Product Disclosure Statement.

This section covers many different aspects of what can happen in a margin call. Importantly it covers when a client fails to meet a margin call (when the account is below 90% margin level) and has not placed further funds in the account so as to withstand any form of adverse gap when the market opens.

Failures to close margin calls are generally handled by the trading platform, but we reserve the right to do this manually in extenuating circumstances.

Kind Regards,

Pepperstone Support

You lie because pepperstone admin wrote me that we closed your positions due to abnormal market conditions. They did not write that we closed your positions because of margin call. And the stopout level is %20.

You did this illegal action for 5k potential profit, it is showing what you can do for higher deposited accounts and potential profits.
So I notice all potential clients and existing clients of pepperscam that pepperstone can close or cancel all your profitable positions