Compliance
Is a Prop Firm a Broker? The Difference That Matters
A prop firm is not a broker: no deposits, no client orders in the market. Why the line matters for licensing, payments and website copy.
- By PipValley Editorial
- Published
- 4 min read
The broker question decides more than a founder expects: which licences may apply, which processors will onboard you, which words your website may use and what your affiliates may say. Getting the distinction right in your own head is the first step to getting it right in your terms.
How do they differ?
| Factor | Broker | Evaluation prop firm |
|---|---|---|
| Client money | Holds deposits for trading | Takes a fee; no trading deposit |
| Orders | Executed in a market or internalized against clients | Simulated; never reach a market |
| Revenue | Spreads, commissions, client losses on B-book | Fees, resets and add-ons |
| Main liability | Client balances | Payouts awarded under its rules |
| Licensing | Usually required | Depends on structure and market; ask a lawyer |
How do firms say it?
Most evaluation firms carry a "not a broker" line in their footer or terms. 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 statements describe the firms' own structures; they are not wording you can copy without your own legal review.
Why are prop firms buying brokers?
Because a broker lets a firm offer its best traders a live route, earn brokerage revenue and build a regulated relationship with customers. FTMO completed its acquisition of OANDA on December 1, 2025. Topstep launched an introducing broker, an NFA member cleared by Plus500, in January 2026. Several large CFD firms now show a broker cross-sell page on their sites.
For a new firm, a broker relationship usually starts smaller: a partner broker for A-booking selected traders, or a referral arrangement. Each adds contracts and legal questions, and your website has to keep the simulated evaluation and the live broker clearly apart.
Questions
Do prop firms hold my money?
An evaluation firm takes a fee for the challenge, not a deposit for trading. It pays rewards from its own revenue. If a firm asks you to deposit trading funds, it is operating a different model.
Can a prop firm also be a broker?
A group can own both, as FTMO does with OANDA, but they are separate businesses with separate rules. The evaluation stays simulated unless the firm states otherwise.
What is the difference between a B-book broker and a prop firm?
A B-book broker takes the other side of real client trades funded by client deposits. A prop firm's trades are simulated and the trader risks only the fee; its exposure is the payouts it awards.
Sources
Illustrative figures, not a forecast. Nothing on this site is legal, tax or financial advice. PipValley is a web design studio; we don’t sell challenges, run trading accounts or provide trading platforms. Spotted something out of date? Tell us and we’ll fix it with the date.
Keep reading
Related guides.
What Is a B-Book Prop Firm? A-Book, B-Book and Hybrid
Do Prop Firms Need a License? What to Ask a Lawyer
Do Prop Firms Use Real Money? What Operators Actually Do
What Is a Prop Firm? The Operator's Definition
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