The Financial Commission has launched a voluntary certification framework for proprietary trading firms, introducing an external dispute resolution model to a sector where growth has outpaced regulatory infrastructure and consumer protections. The new Prop Firm Certification reviews firms' trading rules, evaluation criteria, payout policies, risk controls, financial resilience and complaint-handling procedures, with certified firms receiving public certificates and website listings. The initiative addresses persistent friction in the retail prop trading industry, where funded-account firms allow traders to pay for evaluations and qualify for larger notional balances, yet the sector operates without a common conduct framework while firms and traders regularly disagree over drawdowns, prohibited strategies, simulated execution, payout denials and anti-abuse clauses.
Financial Commission Expands Dispute Resolution Into Prop Trading Sector
The Financial Commission is an independent, industry-funded external dispute resolution body rather than a government regulator. According to the organisation, it has processed more than 12,800 complaints involving approximately $88.8 million in claims. Its existing process requires a trader to first use the firm's internal complaint procedure, after which the Financial Commission can collect evidence from both sides and refer cases to its Dispute Resolution Committee. A decision becomes binding on a member firm when the complainant accepts it, while traders remain free to reject decisions and pursue other remedies.
The certification program does not constitute licensing, legal authorisation or an endorsement of a firm's solvency, profitability or future performance, according to the Financial Commission. Certification should not be confused with deposit insurance, regulatory capital supervision or a government-backed compensation scheme. The new prop certification materials do not state that every certified prop trader dispute will automatically qualify for the organisation's compensation fund protection available to approved broker members.
Prop Firms Control Evaluation Rules And Payout Decisions
Retail prop firms generally operate through evaluation programs where traders pay a fee, trade under defined profit targets and loss limits, and may progress to a funded stage if they meet the conditions. Depending on the firm, the resulting activity may remain entirely simulated, be selectively copied into live markets or form part of a hybrid risk model. Traders are usually not depositing investment capital into an account they own but are buying access to an evaluation and, if successful, becoming eligible for contractual compensation based on simulated or live performance.
Belgium's Financial Services and Markets Authority previously warned that prop trading programs can amount to what it called a "shadow investment game." The regulator focused on the cost of repeated challenges, the simulated nature of many accounts and the firm's discretion over which activity is copied into real markets. It also warned that consumers may spend considerable time and money without receiving compensation. The firm designs the evaluation, calculates the drawdown, controls the account environment, interprets prohibited behaviour and decides whether the payout conditions have been satisfied.
Certification Framework Mandates Detailed Drawdown And Payout Standards
The Financial Commission's Prop Firm Code of Conduct addresses several issues that generate friction between firms and traders. Certified firms must publish their evaluation criteria, risk controls and payout conditions in plain language before a trader enters a program. Material changes must be recorded through version histories and effective dates, while rules affecting an existing challenge or funded account cannot ordinarily be applied retroactively.
The framework goes into detail on drawdown calculations. Firms must identify whether limits are calculated from balance, equity, starting balance, peak balance or a trailing threshold. The formula must be capable of being reproduced from the trader's account records. For funded accounts, the code states that a trailing drawdown should normally lock at the starting balance unless another method has been disclosed and justified.
The code also addresses anti-abuse terminology. Rules covering latency, order routing, consistency, execution patterns and other prohibited strategies must be precisely defined, objectively describable and supported by auditable evidence. Firms cannot rely on vague interpretations that are introduced only after a trader requests payment. The framework recognises that abusive behaviour is a real commercial problem for firms, and certified companies retain the right to restrict or terminate traders involved in deceptive, manipulative or business-threatening activity, provided the firm can document the behaviour and show that its response was consistent with disclosed standards.
Anti-Abuse Protections Address Trader Manipulation Risks
Firms face organised account sharing, identity manipulation, copy-trading networks, latency exploitation, coordinated hedging across firms, payment disputes and public pressure campaigns following rejected payouts. Some strategies may appear profitable on a simulated account but become impossible to replicate in a live environment because they depend on stale prices, unrealistic fills or platform weaknesses.
Ruben Abitbol, Founder of RUBIK and a member of the certification's Expert Committee, said both sides of the market have contributed to the breakdown in trust. "On one side, some firms make inconsistent or poorly justified decisions that negatively affect legitimate traders. On the other, some traders abuse the system by making false accusations, launching defamation campaigns, or attempting to blackmail firms when they don't obtain the outcome they expected. Neither is healthy for the industry," Abitbol stated.
Financial Resilience Testing Assesses Payout Capacity And Solvency
The new code requires certified firms to provide financial information sufficient for the Financial Commission to assess solvency, liquidity and payout capacity. The requested evidence may include audited statements, management accounts, cash-flow records and reserve disclosures. Firms may also undergo scenario-based stress testing covering payout obligations, operational disruption and adverse business conditions. They must report material deterioration, repeated payout delays, creditor action, insolvency risk or uncertainty over their ability to continue operating.
The organisation's Monitoring and Enforcement Protocol provides for quarterly attestations, requests for financial records, compliance reviews and public changes to certification status. Available sanctions include remediation requirements, conditional certification, public notices, suspension and revocation.
Platform And Payment Dependencies Create Operational Risks
The withdrawal of platform support from parts of the funded-trader market forced firms to migrate from MetaTrader to alternative systems, sometimes with little notice. Some operators lost access to trading infrastructure, stopped onboarding customers or faced delays while account data and risk rules were moved between providers. Banks and electronic money institutions may classify funded trading as a higher-risk sector because of chargebacks, cross-border sales, unclear regulatory treatment and disputes over digital services.
MyForexFunds Case Demonstrated Regulatory Classification Uncertainty
The CFTC sued MyForexFunds in 2023, alleging fraud involving more than $310 million in fees from over 135,000 customers. The proceedings later became dominated by allegations of misconduct by the regulator, and the company subsequently moved toward honouring payout requests that had remained outstanding since the shutdown. In February, MyForexFunds planned to process verified 2023 payout claims after recovering most of the assets seized during the case. The case did not produce a simple regulatory template for the wider industry but showed how enforcement action against a major firm can immediately affect traders, employees, vendors and payment relationships before underlying legal questions have been resolved.
Certification Credibility Depends On Enforcement And Public Accountability
Nikolai Isayev, Chief Operating Officer of the Financial Commission, said the program applies the principles used in the organisation's dispute-resolution work to a part of the trading industry that lacks a common benchmark. "By pairing a code of conduct that is rigorous but not overbearing, demanding on the things that matter, yet practical and proportionate to how firms actually run, with ongoing monitoring and the judgement of an expert committee, we give firms a realistic path to prove they play fair, and give traders confidence in who they trade with," Isayev stated.
The Expert Committee includes representatives from prop trading, technology, risk, legal, marketing and financial media. Members include Ruben Abitbol of RUBIK, John Christofides of Truvian, Javier Hertfelder of FXStreet, Justin Hertzberg of FPFX Technologies, Kathy Lien of Prop Trader Edge, Camilo Tobar of Swiset and growth adviser Stanislav Galandzovskyi. Final determinations remain with the Financial Commission.
FAQ
What does Financial Commission certification mean for prop trading firms?
Certification indicates that a prop firm has passed the Financial Commission's assessment of trading rules, evaluation criteria, payout policies, risk controls, financial resilience and complaint-handling procedures. Certified firms receive a public certificate, website listing and permission to display the certification badge. However, certification does not constitute licensing, legal authorisation or an endorsement of a firm's solvency, profitability or future performance.
How does the certification framework address payout disputes between firms and traders?
The framework establishes evidentiary standards for disputes by requiring certified firms to publish evaluation criteria and payout conditions in plain language, maintain version histories for rule changes, use reproducible drawdown formulas, and define anti-abuse rules with auditable evidence. The Financial Commission can examine trading records, platform logs, communications and rule wording when disputes remain unresolved through a firm's internal complaint procedure.
