Funding Pips Pushes Traders to New Account, Causing Online Grievance

Retail prop trading has fallen off the European regulatory agenda. Dr George Theocharides, Chairman of CySEC and Chairman of ESMA's Risk Standing Committee, told Finance Magnates that the EU regulator is not presently engaged in any substantive discussions on the sector. While the topic may be monitored as part of broader market developments, he said, it does not rank among the Authority's immediate priorities given the sector's relatively limited size. The comments come roughly two years after Paris first opened talks on oversight, and a year after Theocharides described retail prop trading as "on the radar." ESMA declined to comment.

The pause sits awkwardly against the market's growth. Google Trends data show search interest in the term "prop firm" climbing sharply across the UK, US and Germany over five years, with German queries up more than 1,050% and peaking in February 2026. Gen Z and millennial traders, attracted by the prospect of trading sizeable capital without risking their own savings, are driving demand. Two prop firms, Funding Pips and FundedNext, made Deloitte's 2026 Fast 50 ranking for the Middle East and Cyprus.

A merger with regulated brokerage

Structurally, prop firms and regulated brokers are converging. FTMO has acquired OANDA, The Trading Pit launched CFD broker TTP Markets, Axi introduced Axi Select, and ATFX rolled out ATFunded. Much of this was forced by MetaQuotes' 2024 decision to revoke MT4 and MT5 licences from prop firms, a move that followed the CFTC's 2023 raid and asset freeze against My Forex Funds. FM Intelligence estimates up to 100 prop firms shut between early 2024 and late 2025, roughly 14% of the market.

Economics add pressure. FPFX data indicate only 7% of traders who buy a challenge secure a payout, leaving many firms reliant on evaluation fees from the 93% who fail. ATFX has paused ATFunded while assessing long-term sustainability. Where hybrid models work, they act as a funnel: ATFX reported converting more than 10% of its prop traders into brokerage clients in South America, while FundingPips lets traders move rewards to its regulated broker Tradin with a 30% trading bonus. Many firms have taken brokerage licences in lighter-touch jurisdictions, with Mauritius increasingly popular.

The US picture is different. Large American prop firms are seeking CFTC registration, with Topstep now a registered introducing broker routing orders through an FCM — Plus500 serves as its FCM. Under MiFID II, a comparable Reception and Transmission of Orders licence would be needed, but European firms show no sign of following.

Ambiguity persists. Crypto Fund Trader staged a fake security breach and "unauthorised transfer of funds," later admitting it was marketing for a new account type. Italy's Consob warned in 2024 that prop firm sites promote what amounts to a "finance video game." Absent a scandal on the scale of My Forex Funds, the stalemate looks likely to hold.