Future of the Prop Trading Industry: “3 Players Will Take 80%”, FTMO Forecasts

by Damian Chmiel
  • The panelists at FMLS:23 discussed how the prop trading industry is changing.
  • “We always were focusing on trading. We wanted to trade for a living. And that was that was the idea.”
CEO Otakar Suffner and CTO Marek Vasicek from FTMO
From left: FTMO CEO Otakar Suffner and CTO Marek Vasicek on Finance Magnates London Summit
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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.

Prop Trading Pioneers FTMO Share Origin Story and Industry Outlook

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.

Acuiti
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 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.

Prop Trading Pioneers FTMO Share Origin Story and Industry Outlook

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.

Acuiti
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 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.

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