The
proprietary (prop) trading industry is undergoing major consolidation, with
projections that a few top firms will control 80% of the market share in the
coming years. The future outlook of prop trading was a key topic discussed at
the 2023 Finance Magnates London Summit (FMLS:23). FTMO founders, who launched
their prop trading company from a university dorm room ten years ago,
participated in a panel addressing industry trends.
The conversation is critical because the proprietary trading industry did not enjoy a good reputation in 2023 due to scandals surrounding it, especially in the USA.
Marek
Vasicek, the CTO, and Otakar Suffner, the CEO, started FTMO (previously named Czech Prop
Trading) in 2013 while students at a university in Prague. Frustrated by the
inability to profit sufficiently from their successful trading with small
accounts, they conceived of a prop trading firm to provide trading capital to
proven traders.
“We
always were focusing on trading. We wanted to trade for a living. And that was the idea,” Vasicek commented.
It took 5
years of bootstrapping before FTMO gained traction in the industry. But once
recognized, FTMO’s growth rapidly accelerated, crossing 100 employees in 2020
and 200 in 2022. Last year, FTMO acquired Quant Lane, a Czech prop trading
company, to complement its existing business.
“I
would say that the most difficult point was from about 2013 to 2017 because we
didn’t have any salary,” said Suffner. “It was difficult to explain
to other people what you are doing and it it makes sense even though it is not
working at all.”
More FX in Proprietary
Trading
According
to independent reports outside the panel, proprietary trading firms operate on
a global scale but are primarily focused on the American and British markets.
Moreover, the Acuiti Proprietary Trading Management Insight Report
published in November suggested that the activity of companies in this sector is
expected to increase significantly in 2024.
Around 45%
of FX trading companies are planning to significantly enhance their involvement
in the asset class, demonstrating a particular enthusiasm for equity options. On
the other hand, there is a declining interest in cash equities, particularly in
Europe, where a significant number of prop firms are looking to reduce their
exposure.
Source: Acuiti
“The
report reveals that proprietary trading firms are willing to invest in
improving their connectivity to markets, including exploring new ones,”
Aleksey Larichev, the Managing Director at Avelacom, commented.
The elephant in the room remains the issue of scandals associated with the proprietary trading industry in the USA, including the high-profile case of My Forex Funds.
Prop Trading Struggled
with Reputation in 2023
The
troubles began towards the end of the year when in September, the Commodity
Futures Trading Commission (CFTC) in the United States and the Ontario
Securities Commission (OSC) in Canada initiated actions against two companies
operating My Forex Funds and their owner. The case involves 135,000 clients and
commissions they were paid to the amount of $310 million.
Both CFTC
and OSC brought charges against Murtuza Kazmi, who operated My Forex Funds
through his two companies: Traders Global Group Inc., incorporated in New
Jersey, and Canada-based Traders Global Group Inc. While the CFTC named both
companies in its action, the Canadian regulator is only pursuing the Canadian
entity, along with Kazmi.
The prop
trading platform My Forex Funds exclusively shared its first official comment
about the lawsuit by the US commodities regulator with Finance Magnates. In
this statement, the platform described the allegations as a “grossly
inaccurate and incomplete picture of the facts.”
Prop Trading Industry to
Consolidate
On the
future of prop trading, Suffner sees the industry stabilizing with around 2-3 major
players taking a majority of the market share. He believes FTMO is well positioned
to be one of those companies.
“The
industry is probably going to stabilize between say 2-3 players which will take
70-80% of the market.”
Vasicek and
Suffner also discussed the need for regulation
Regulation
Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority (
Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority (
Read this Term in prop trading to ensure
professionalism and transparency. While uncertain on specifics, they believe
regulators will eventually step in given prop trading’s rapid growth. In the
meantime, FTMO strives for credibility by providing traders free access to
challenge accounts, trading statistics, and performance coaching.
Vasicek
said the unique model of prop trading firms may limit regulatory oversight.
“We are not educating anyone trading strategies,” he explained.
“We just provide you a period of time where you can trade with your own
strategy.”
With 10
years in the industry and still its original founders at the helm, FTMO has
both the experience and hunger to continue leading the way in prop trading. It focuses
on serving traders by enhancing offerings like its FTMO Academy education
platform.
The
proprietary (prop) trading industry is undergoing major consolidation, with
projections that a few top firms will control 80% of the market share in the
coming years. The future outlook of prop trading was a key topic discussed at
the 2023 Finance Magnates London Summit (FMLS:23). FTMO founders, who launched
their prop trading company from a university dorm room ten years ago,
participated in a panel addressing industry trends.
The conversation is critical because the proprietary trading industry did not enjoy a good reputation in 2023 due to scandals surrounding it, especially in the USA.
Marek
Vasicek, the CTO, and Otakar Suffner, the CEO, started FTMO (previously named Czech Prop
Trading) in 2013 while students at a university in Prague. Frustrated by the
inability to profit sufficiently from their successful trading with small
accounts, they conceived of a prop trading firm to provide trading capital to
proven traders.
“We
always were focusing on trading. We wanted to trade for a living. And that was the idea,” Vasicek commented.
It took 5
years of bootstrapping before FTMO gained traction in the industry. But once
recognized, FTMO’s growth rapidly accelerated, crossing 100 employees in 2020
and 200 in 2022. Last year, FTMO acquired Quant Lane, a Czech prop trading
company, to complement its existing business.
“I
would say that the most difficult point was from about 2013 to 2017 because we
didn’t have any salary,” said Suffner. “It was difficult to explain
to other people what you are doing and it it makes sense even though it is not
working at all.”
More FX in Proprietary
Trading
According
to independent reports outside the panel, proprietary trading firms operate on
a global scale but are primarily focused on the American and British markets.
Moreover, the Acuiti Proprietary Trading Management Insight Report
published in November suggested that the activity of companies in this sector is
expected to increase significantly in 2024.
Around 45%
of FX trading companies are planning to significantly enhance their involvement
in the asset class, demonstrating a particular enthusiasm for equity options. On
the other hand, there is a declining interest in cash equities, particularly in
Europe, where a significant number of prop firms are looking to reduce their
exposure.
Source: Acuiti
“The
report reveals that proprietary trading firms are willing to invest in
improving their connectivity to markets, including exploring new ones,”
Aleksey Larichev, the Managing Director at Avelacom, commented.
The elephant in the room remains the issue of scandals associated with the proprietary trading industry in the USA, including the high-profile case of My Forex Funds.
Prop Trading Struggled
with Reputation in 2023
The
troubles began towards the end of the year when in September, the Commodity
Futures Trading Commission (CFTC) in the United States and the Ontario
Securities Commission (OSC) in Canada initiated actions against two companies
operating My Forex Funds and their owner. The case involves 135,000 clients and
commissions they were paid to the amount of $310 million.
Both CFTC
and OSC brought charges against Murtuza Kazmi, who operated My Forex Funds
through his two companies: Traders Global Group Inc., incorporated in New
Jersey, and Canada-based Traders Global Group Inc. While the CFTC named both
companies in its action, the Canadian regulator is only pursuing the Canadian
entity, along with Kazmi.
The prop
trading platform My Forex Funds exclusively shared its first official comment
about the lawsuit by the US commodities regulator with Finance Magnates. In
this statement, the platform described the allegations as a “grossly
inaccurate and incomplete picture of the facts.”
Prop Trading Industry to
Consolidate
On the
future of prop trading, Suffner sees the industry stabilizing with around 2-3 major
players taking a majority of the market share. He believes FTMO is well positioned
to be one of those companies.
“The
industry is probably going to stabilize between say 2-3 players which will take
70-80% of the market.”
Vasicek and
Suffner also discussed the need for regulation
Regulation
Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority (
Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority (
Read this Term in prop trading to ensure
professionalism and transparency. While uncertain on specifics, they believe
regulators will eventually step in given prop trading’s rapid growth. In the
meantime, FTMO strives for credibility by providing traders free access to
challenge accounts, trading statistics, and performance coaching.
Vasicek
said the unique model of prop trading firms may limit regulatory oversight.
“We are not educating anyone trading strategies,” he explained.
“We just provide you a period of time where you can trade with your own
strategy.”
With 10
years in the industry and still its original founders at the helm, FTMO has
both the experience and hunger to continue leading the way in prop trading. It focuses
on serving traders by enhancing offerings like its FTMO Academy education
platform.