# Are prop firms regulated? > Most retail prop firms are not regulated as brokers or investment firms. Traders pay for an evaluation and trade simulated accounts, so the firm holds no client trading funds. Regulators can still act — the CFTC sued one major firm in 2023 — and a firm’s marketing, payments and any live trading can fall under existing rules. **Source:** https://propfirmpal.com/learn/are-prop-firms-regulated **Generated:** 2026-09-25 **Publisher:** Prop Firm Pal — independent prop firm comparison _Prop Firm Pal earns affiliate commission from some listed firms. This is disclosed on-site and does not affect the computed ranking order._ --- _Updated 2026-09-24._ ## Why most prop firms sit outside broker regulation 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](https://ftmo.com/en/faq/how-does-an-ftmo-account-work-from-the-technical-side/) — 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. ## United States 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](https://www.cftc.gov/PressRoom/PressReleases/8771-23), alleging fraud in how the firm described its trading and its counterparty role. The case was [dismissed with prejudice in May 2025](https://www.financemagnates.com/forex/my-forex-funds-parent-defeats-cftc-in-court-as-judge-imposes-sanctions/) 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](https://www.nfa.futures.org/basicnet/) shows whether a firm or person is registered, and the CFTC’s [RED List](https://www.cftc.gov/LearnAndProtect/Resources/Check/redlist.htm) names foreign entities that appear to need registration and do not have it. ## United Kingdom In the UK, [section 21 of the Financial Services and Markets Act 2000](https://www.legislation.gov.uk/ukpga/2000/8/section/21) 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](https://register.fca.org.uk/). ## India The Reserve Bank of India has [cautioned that residents may undertake forex transactions only with authorised persons and for permitted purposes](https://www.rbi.org.in/commonman/english/scripts/PressReleases.aspx?Id=3369) 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](https://propfirmpal.com/countries/india) shows firms that accept Indian residents. ## Where the platforms stepped in 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](https://www.financemagnates.com/forex/prop-trading-firms-renaissance-cutting-us-clients-integrating-new-trading-platforms/), 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. ## How to check a firm yourself 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](https://www.nfa.futures.org/basicnet/), the [FCA register](https://register.fca.org.uk/) or [FINRA BrokerCheck](https://brokercheck.finra.org/) — 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?](https://propfirmpal.com/learn/are-prop-firms-legit) for the non-regulatory checks. ## What regulation would and would not protect 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. ## Frequently asked questions ### Is prop trading legal in the USA? Yes. US residents can legally take prop firm evaluations. Regulators oversee firms’ conduct, and some forex firms restrict US traders for platform and regulatory reasons. ### Is prop firm trading legal in the UK? Yes, for traders. UK rules on financial promotions and authorisation apply to what firms offer and how they market it. ### Are prop firms allowed in India? The RBI restricts forex dealings to authorised persons and warns against unauthorised platforms. Whether a simulated evaluation is caught is unclear, so take local advice. ### Are there regulated prop firms? Few retail prop firms are regulated for the evaluation itself. Some route their own trading through regulated brokers, which does not protect your fee or payouts. ### What happened to My Forex Funds? The CFTC sued its operator in 2023 and its assets were frozen. A federal judge dismissed the case with prejudice in May 2025 and sanctioned the CFTC. ### What is the CFTC RED List? A CFTC list of foreign entities that appear to be acting in a capacity requiring CFTC registration without being registered. It is one check among several, not a complete list. ## Sources - [CFTC — complaint against My Forex Funds (2023)](https://www.cftc.gov/PressRoom/PressReleases/8771-23) - [Finance Magnates — CFTC case dismissed (2025)](https://www.financemagnates.com/forex/my-forex-funds-parent-defeats-cftc-in-court-as-judge-imposes-sanctions/) - [NFA BASIC registration search](https://www.nfa.futures.org/basicnet/) - [CFTC RED List](https://www.cftc.gov/LearnAndProtect/Resources/Check/redlist.htm) - [FSMA 2000, section 21](https://www.legislation.gov.uk/ukpga/2000/8/section/21) - [FCA register](https://register.fca.org.uk/) - [RBI — caution on unauthorised forex platforms](https://www.rbi.org.in/commonman/english/scripts/PressReleases.aspx?Id=3369) - [Finance Magnates — prop firms and MetaQuotes (2024)](https://www.financemagnates.com/forex/prop-trading-firms-renaissance-cutting-us-clients-integrating-new-trading-platforms/) ## Related pages - [Are prop firms legit?](https://propfirmpal.com/learn/are-prop-firms-legit) - [Prop firm vs broker vs hedge fund](https://propfirmpal.com/learn/prop-firm-vs-broker-vs-hedge-fund) - [Prop firms for US traders](https://propfirmpal.com/countries/united-states) - [Regulation in the glossary](https://propfirmpal.com/glossary/regulation) - [What is a prop firm?](https://propfirmpal.com/learn/what-is-a-prop-firm) — markdown: https://propfirmpal.com/learn/what-is-a-prop-firm.md - [How funded trading accounts work](https://propfirmpal.com/learn/funded-trading-accounts) — markdown: https://propfirmpal.com/learn/funded-trading-accounts.md - [How to get a funded trading account](https://propfirmpal.com/learn/how-to-get-a-funded-trading-account) — markdown: https://propfirmpal.com/learn/how-to-get-a-funded-trading-account.md - [How prop firm challenges work](https://propfirmpal.com/learn/how-prop-firm-challenges-work) — markdown: https://propfirmpal.com/learn/how-prop-firm-challenges-work.md - [Instant funding vs evaluation](https://propfirmpal.com/learn/instant-funding-vs-evaluation) — markdown: https://propfirmpal.com/learn/instant-funding-vs-evaluation.md - [Why traders fail prop firm challenges](https://propfirmpal.com/learn/why-traders-fail-prop-firm-challenges) — markdown: https://propfirmpal.com/learn/why-traders-fail-prop-firm-challenges.md - [Prop firm drawdown types explained](https://propfirmpal.com/learn/prop-firm-drawdown-types) — markdown: https://propfirmpal.com/learn/prop-firm-drawdown-types.md - [How to scale a funded account](https://propfirmpal.com/learn/how-to-scale-a-funded-account) — markdown: https://propfirmpal.com/learn/how-to-scale-a-funded-account.md - [Futures vs forex prop firms](https://propfirmpal.com/learn/futures-vs-forex-prop-firms) — markdown: https://propfirmpal.com/learn/futures-vs-forex-prop-firms.md - [How to choose a prop firm](https://propfirmpal.com/learn/how-to-choose-a-prop-firm) — markdown: https://propfirmpal.com/learn/how-to-choose-a-prop-firm.md - [Prop firm vs broker vs hedge fund](https://propfirmpal.com/learn/prop-firm-vs-broker-vs-hedge-fund) — markdown: https://propfirmpal.com/learn/prop-firm-vs-broker-vs-hedge-fund.md - [How do prop firms make money?](https://propfirmpal.com/learn/how-do-prop-firms-make-money) — markdown: https://propfirmpal.com/learn/how-do-prop-firms-make-money.md - [How prop firm payouts work](https://propfirmpal.com/learn/how-prop-firm-payouts-work) — markdown: https://propfirmpal.com/learn/how-prop-firm-payouts-work.md - [Can you make money with a prop firm?](https://propfirmpal.com/learn/can-you-make-money-with-a-prop-firm) — markdown: https://propfirmpal.com/learn/can-you-make-money-with-a-prop-firm.md - [Prop firm taxes](https://propfirmpal.com/learn/prop-firm-taxes) — markdown: https://propfirmpal.com/learn/prop-firm-taxes.md - [Are prop firms legit?](https://propfirmpal.com/learn/are-prop-firms-legit) — markdown: https://propfirmpal.com/learn/are-prop-firms-legit.md - [Are prop firms going away?](https://propfirmpal.com/learn/are-prop-firms-going-away) — markdown: https://propfirmpal.com/learn/are-prop-firms-going-away.md