Prop Trading Survey: 60% of Traders Prefer Broker-Backed Prop Firms

A recent survey reveals that broker-backed proprietary (prop) trading firms are gaining trust among retail traders. Nearly 60% of respondents said they find firms operated by FX/CFD brokers more reliable than independent prop firms. This trend highlights a growing preference for regulated and professionally managed firms in the prop trading space.

Broker-Backed Firms Earning Trust

Prop trading has traditionally been dominated by independent firms, but the entry of regulated FX/CFD brokers is changing the landscape. According to the survey conducted by PipFarm, 60% of respondents expressed more trust in broker-backed prop firms. Only 14% disagreed, and 26% remained neutral.

“Failures in the prop trading industry often stem from poor internal controls” said James Glyde, CEO of PipFarm. “Broker-backed firms have the resources and expertise to manage these challenges effectively, which is why traders trust them more.”

Several well-known brokers have already launched their own prop trading arms, including IC Funded, Axi Select and Labs Prop Trader by OANDA.

In-House Tech Preferred

Beyond greater trust in broker-backed prop firms, respondents of this prop trading survey also indicated that companies with in-house tech rather than external solutions are much more reliable. About 61% of respondents agreed with this, while 8% disagreed, and 31% were undecided. This preference reflects traders’ desire for more stable and transparent systems.

Regulators Turn Up the Heat on Prop Trading Firms

Opting for regulated, broker-backed proprietary trading firms is becoming a more cautious and sensible choice as global regulators increase their focus on the industry.

In July, Italy’s Consob compared proprietary trading to “video games” questioning its legitimacy as a trading activity. Marco Martire, Fintokei’s Italy Manager, emphasized that regulatory scrutiny of the prop trading sector is currently at a heightened level.

“The price war and easy challenge period is coming to an end, and traders appreciate a more transparent and institutional approach.” added Glyde.

India’s Securities and Exchange Board (SEBI) echoed similar concerns, describing prop trading as “fantasy games.” Meanwhile, the European Securities and Markets Authority (ESMA) has started exploring regulatory measures for prop trading firms, and the Czech financial regulator has indicated that these firms could fall under MiFID rules.