# Do Prop Firms Need a License? What to Ask a Lawyer

> Whether a prop firm needs a license depends on how its product is structured and where it sells, and only a lawyer in each jurisdiction can answer it for your firm. Many evaluation firms operate without a broker license because accounts are simulated and traders deposit no trading funds. Some large firms are adding licensed businesses, and regulators in several countries are watching.

- Source: https://pipvalley.com/guides/do-prop-firms-need-a-license
- Publisher: PipValley - web design studio for prop trading firms
- Updated: 2026-10-12

**Short answer:** Whether a prop firm needs a license depends on how its product is structured and where it sells, and only a lawyer in each jurisdiction can answer it for your firm. Many evaluation firms operate without a broker license because accounts are simulated and traders deposit no trading funds. Some large firms are adding licensed businesses, and regulators in several countries are watching.

This is the question founders most want a simple answer to, and the one a blog can least responsibly give. What we can do is show how firms position themselves, what has changed since 2023, and the questions to take to a lawyer.

> This page explains how things generally work and what we've seen running prop firms. It isn't legal, tax or financial advice. Rules differ by country and change often, so ask a lawyer or adviser in your jurisdiction before you act.

## How do evaluation firms describe themselves?

Most evaluation firms state on their sites that they are not brokers and do not take deposits, and that trading is simulated. FTMO says it does "not act as a broker and do not accept any deposits". MyFundedFutures says it is "not a broker-dealer, investment adviser, introducing broker, futures commission merchant (FCM), or money manager". These are the firms' own statements about their own structures, not legal conclusions you can borrow.

## What has changed?

- August 2023: the CFTC froze MyForexFunds. In May 2025 a US federal judge dismissed the case with prejudice and sanctioned the agency's conduct; that is not a ruling that the evaluation model is lawful.
- December 1, 2025: FTMO completed its acquisition of OANDA, a regulated broker.
- January 2026: Topstep launched an introducing broker, an NFA member cleared by Plus500.
- June 2026: the CySEC chair said ESMA "is not currently engaged in any substantive discussions regarding retail prop trading," per Finance Magnates.
- In Australia, ASIC said in 2024 it is "monitoring the emergence of 'prop trading' firms".

## What should you ask a lawyer?

Choose your jurisdiction with your lawyer and your payment processor in the room, because a processor that won't onboard your entity decides the question for you. Our country pages cover the US, UK, Australia, Dubai and India.

- Does our evaluation product, as designed, raise a registration or licensing question where we are based, or where our traders are?
- Does marketing to a given country, including through affiliates, change the answer?
- How must we describe payouts so they are not read as investment returns?
- If we copy traders into live accounts, what does that add?
- Which countries should we restrict at launch?

## Questions

### Do I need a broker license to run a prop firm?

Many evaluation firms say they are not brokers and hold no broker license, because they take no deposits and accounts are simulated. Whether that holds for your structure is a question for a lawyer where you operate and sell.

### Is a white-label prop firm covered by the provider's license?

Not automatically. The provider's arrangements cover its own business. Your company, marketing and terms are yours, and need their own legal review.

### Will prop firms need licenses in future?

Possibly in some markets. Large firms are already adding regulated businesses, and regulators such as ASIC have said they are monitoring prop trading. Our page on whether prop firms will be regulated tracks it.

## Sources

- [FTMO: homepage and simulated-account disclosure](https://ftmo.com/en/)
- [MyFundedFutures: homepage and disclosures](https://myfundedfutures.com/)
- [Willkie Compliance Concourse: New Jersey federal judge dismisses forex case with prejudice](https://complianceconcourse.willkie.com/articles/new-jersey-federal-judge-dismisses-forex-case-with-prejudice-and-awards-attorney-fees/)
- [Finance Magnates: FTMO closes OANDA acquisition deal after ten months](https://www.financemagnates.com/forex/prop-firm-ftmo-closes-oanda-acquisition-deal-after-ten-months/)
- [TradeInformer: Topstep launches introducing broker through Plus500 partnership](https://tradeinformer.com/broker-news/topstep-launches-introducing-broker-through-plus500-partnership)
- [Finance Magnates: Prop trading slips down Paris agenda as the US steps up (Jun 26, 2026)](https://www.financemagnates.com/forex/prop-trading-slips-down-paris-agenda-as-the-us-steps-up/)
- [Finance Magnates: ASIC is monitoring the emergence of prop trading firms (Aug 14, 2024)](https://www.financemagnates.com/executives/exclusive-asic-is-monitoring-the-emergence-of-prop-trading-firms/)