Are prop firms regulated?

Updated 24 September 2026 by the Prop Firm Pal editorial team.

Broker regulation exists to protect customer money and customer orders. A retail prop firm usually takes neither: the fee buys an evaluation, the account is simulated — FTMO’s terms describe fictitious capital — and the payout is a reward from the firm. That structure is why most firms are not registered as brokers, and why “regulated prop firm” usually means something narrower, such as a firm whose own trading runs through a regulated broker.

The flip side is that the protections of a regulated account — segregated funds, compensation schemes, complaint ombudsmen — generally do not apply to your evaluation fee or your payouts.

Futures and retail forex are overseen by the CFTC, with the NFA as the industry’s self-regulatory body. In August 2023 the CFTC brought a case against My Forex Funds, alleging fraud in how the firm described its trading and its counterparty role. The case was dismissed with prejudice in May 2025 after the court found the CFTC had misled it, and the agency was ordered to pay legal fees.

For a US trader, taking a prop firm evaluation is legal and widely done; what is regulated is the firm’s conduct. Two public tools help: NFA BASIC shows whether a firm or person is registered, and the CFTC’s RED List names foreign entities that appear to need registration and do not have it.

In the UK, section 21 of the Financial Services and Markets Act 2000 restricts financial promotions to those made or approved by an authorised person, and the FCA polices it. Whether a given prop firm’s marketing falls within that restriction depends on what it offers, and is for the firm and the FCA to settle. Taking an evaluation is legal for UK residents. You can check any firm claiming authorisation on the FCA register.

The Reserve Bank of India has cautioned that residents may undertake forex transactions only with authorised persons and for permitted purposes under FEMA, and publishes an Alert List of unauthorised platforms. Whether paying a foreign prop firm for a simulated evaluation is caught by those rules is not settled in anything we have found from the RBI, so Indian traders should take local advice before paying in foreign currency. Our India list shows firms that accept Indian residents.

The change that affected most traders came from a software vendor, not a regulator. In February 2024 MetaQuotes withdrew MetaTrader from prop firms, reportedly over active US client accounts, and several firms suspended US sign-ups or moved to platforms such as cTrader, DXtrade, Match-Trader and TradeLocker. It is why many forex firms still restrict US traders today.

Regulation or not, a few checks cover most of the risk.

• If a firm claims to be regulated, look it up on the regulator’s own register — NFA BASIC, the FCA register or FINRA BrokerCheck — rather than trusting a logo.
• Confirm the legal entity and country named in the terms.
• Check the firm accepts your country, and that its payout methods work there.
• Read are prop firms legit? for the non-regulatory checks.

Even where a firm is authorised for something, check what that authorisation covers. A licence to act as a broker protects money held in a brokerage account; it does not automatically cover a fee paid for an evaluation, or a reward paid from a simulated account. Read the entity name in the terms, then look that entity up on the regulator’s register to see what it is authorised to do.

CFTC — complaint against My Forex Funds (2023)

Finance Magnates — CFTC case dismissed (2025)

NFA BASIC registration search

CFTC RED List

FSMA 2000, section 21

FCA register

RBI — caution on unauthorised forex platforms

Finance Magnates — prop firms and MetaQuotes (2024)