Theproprietary (prop) trading industry is undergoing major consolidation, withprojections that a few top firms will control 80% of the market share in thecoming years. The future outlook of prop trading was a key topic discussed atthe 2023 Finance Magnates London Summit (FMLS:23). FTMO founders, who launchedtheir 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.
MarekVasicek, the CTO, and Otakar Suffner, the CEO, started FTMO (previously named Czech PropTrading) in 2013 while students at a university in Prague. Frustrated by theinability to profit sufficiently from their successful trading with smallaccounts, they conceived of a prop trading firm to provide trading capital toproven traders.
"Wealways were focusing on trading. We wanted to trade for a living. And that was the idea,” Vasicek commented.
It took 5years of bootstrapping before FTMO gained traction in the industry. But oncerecognized, FTMO's growth rapidly accelerated, crossing 100 employees in 2020and 200 in 2022. Last year, FTMO acquired Quant Lane, a Czech prop tradingcompany, to complement its existing business.
"Iwould say that the most difficult point was from about 2013 to 2017 because wedidn't have any salary," said Suffner. "It was difficult to explainto other people what you are doing and it it makes sense even though it is notworking at all."
More FX in ProprietaryTrading
Accordingto independent reports outside the panel, proprietary trading firms operate ona global scale but are primarily focused on the American and British markets.Moreover, the Acuiti Proprietary Trading Management Insight Reportpublished in November suggested that the activity of companies in this sector isexpected to increase significantly in 2024.
Around 45%of FX trading companies are planning to significantly enhance their involvementin the asset class, demonstrating a particular enthusiasm for equity options. Onthe other hand, there is a declining interest in cash equities, particularly inEurope, where a significant number of prop firms are looking to reduce theirexposure.
"Thereport reveals that proprietary trading firms are willing to invest inimproving 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 Struggledwith Reputation in 2023
Thetroubles began towards the end of the year when in September, the CommodityFutures Trading Commission (CFTC) in the United States and the OntarioSecurities Commission (OSC) in Canada initiated actions against two companiesoperating My Forex Funds and their owner. The case involves 135,000 clients andcommissions they were paid to the amount of $310 million.
Both CFTCand OSC brought charges against Murtuza Kazmi, who operated My Forex Fundsthrough his two companies: Traders Global Group Inc., incorporated in NewJersey, and Canada-based Traders Global Group Inc. While the CFTC named bothcompanies in its action, the Canadian regulator is only pursuing the Canadianentity, along with Kazmi.
The proptrading platform My Forex Funds exclusively shared its first official commentabout the lawsuit by the US commodities regulator with Finance Magnates. Inthis statement, the platform described the allegations as a "grosslyinaccurate and incomplete picture of the facts."
Prop Trading Industry toConsolidate
On thefuture of prop trading, Suffner sees the industry stabilizing with around 2-3 majorplayers taking a majority of the market share. He believes FTMO is well positionedto be one of those companies.
"Theindustry is probably going to stabilize between say 2-3 players which will take70-80% of the market."
Vasicek andSuffner also discussed the need for regulation in prop trading to ensureprofessionalism and transparency. While uncertain on specifics, they believeregulators will eventually step in given prop trading's rapid growth. In themeantime, FTMO strives for credibility by providing traders free access tochallenge accounts, trading statistics, and performance coaching.
Vasiceksaid 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 ownstrategy."
With 10years in the industry and still its original founders at the helm, FTMO hasboth the experience and hunger to continue leading the way in prop trading. It focuseson serving traders by enhancing offerings like its FTMO Academy educationplatform.
Theproprietary (prop) trading industry is undergoing major consolidation, withprojections that a few top firms will control 80% of the market share in thecoming years. The future outlook of prop trading was a key topic discussed atthe 2023 Finance Magnates London Summit (FMLS:23). FTMO founders, who launchedtheir 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.
MarekVasicek, the CTO, and Otakar Suffner, the CEO, started FTMO (previously named Czech PropTrading) in 2013 while students at a university in Prague. Frustrated by theinability to profit sufficiently from their successful trading with smallaccounts, they conceived of a prop trading firm to provide trading capital toproven traders.
"Wealways were focusing on trading. We wanted to trade for a living. And that was the idea,” Vasicek commented.
It took 5years of bootstrapping before FTMO gained traction in the industry. But oncerecognized, FTMO's growth rapidly accelerated, crossing 100 employees in 2020and 200 in 2022. Last year, FTMO acquired Quant Lane, a Czech prop tradingcompany, to complement its existing business.
"Iwould say that the most difficult point was from about 2013 to 2017 because wedidn't have any salary," said Suffner. "It was difficult to explainto other people what you are doing and it it makes sense even though it is notworking at all."
More FX in ProprietaryTrading
Accordingto independent reports outside the panel, proprietary trading firms operate ona global scale but are primarily focused on the American and British markets.Moreover, the Acuiti Proprietary Trading Management Insight Reportpublished in November suggested that the activity of companies in this sector isexpected to increase significantly in 2024.
Around 45%of FX trading companies are planning to significantly enhance their involvementin the asset class, demonstrating a particular enthusiasm for equity options. Onthe other hand, there is a declining interest in cash equities, particularly inEurope, where a significant number of prop firms are looking to reduce theirexposure.
"Thereport reveals that proprietary trading firms are willing to invest inimproving their connectivity to markets, including exploring new ones,"Aleksey Larichev, the Managing Director at Avelacom, commented.
ADVERTIsem*nT
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 Struggledwith Reputation in 2023
Thetroubles began towards the end of the year when in September, the CommodityFutures Trading Commission (CFTC) in the United States and the OntarioSecurities Commission (OSC) in Canada initiated actions against two companiesoperating My Forex Funds and their owner. The case involves 135,000 clients andcommissions they were paid to the amount of $310 million.
Both CFTCand OSC brought charges against Murtuza Kazmi, who operated My Forex Fundsthrough his two companies: Traders Global Group Inc., incorporated in NewJersey, and Canada-based Traders Global Group Inc. While the CFTC named bothcompanies in its action, the Canadian regulator is only pursuing the Canadianentity, along with Kazmi.
The proptrading platform My Forex Funds exclusively shared its first official commentabout the lawsuit by the US commodities regulator with Finance Magnates. Inthis statement, the platform described the allegations as a "grosslyinaccurate and incomplete picture of the facts."
Prop Trading Industry toConsolidate
On thefuture of prop trading, Suffner sees the industry stabilizing with around 2-3 majorplayers taking a majority of the market share. He believes FTMO is well positionedto be one of those companies.
"Theindustry is probably going to stabilize between say 2-3 players which will take70-80% of the market."
Vasicek andSuffner also discussed the need for regulation in prop trading to ensureprofessionalism and transparency. While uncertain on specifics, they believeregulators will eventually step in given prop trading's rapid growth. In themeantime, FTMO strives for credibility by providing traders free access tochallenge accounts, trading statistics, and performance coaching.
Vasiceksaid 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 ownstrategy."
With 10years in the industry and still its original founders at the helm, FTMO hasboth the experience and hunger to continue leading the way in prop trading. It focuseson serving traders by enhancing offerings like its FTMO Academy educationplatform.
