Is it legal to start a prop firm?
Quick answer
In most countries, selling trading evaluations on simulated accounts is not prohibited as such, and many prop firms operate openly. Legality depends on where you are based, where your customers are, how you describe the product and whether any part of it counts as a regulated financial service.
Detailed answer
General information, not legal, tax or regulatory advice. Rules differ by country and change over time; confirm your position with a qualified professional before acting on it.
The question has several parts, and the answer can differ for each:
- Your company's home country: what activity it is licensed for and how its regulator views evaluations.
- Your customers' countries: some restrict offering trading-related products to their residents.
- The product: simulated evaluations are generally treated differently from managing client money or executing trades.
- Marketing: promising earnings or describing simulated accounts as real capital can create problems.
Most firms structure themselves as companies selling evaluations and paying performance rewards, state clearly that accounts are simulated, and restrict countries where the risk is high. Using a simulator rather than a brokerage keeps you away from client-money rules; PropExecutor, for instance, never places orders on a real market.
This is general information, not legal advice. Take advice in your own jurisdiction before launching.
Questions to bring to a lawyer
- Is my product treated as a service, a game of skill, or a financial product where I am based?
- Which countries should I not sell to?
- How should I describe simulated accounts and payouts?
PropExecutor team · Updated
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