The rise of proprietary trading programmes has pushed many UK traders to ask the same question:
“Are prop firms regulated by the FCA, and what rules actually apply?”
This guide breaks down the current framework, the legal status of prop firms in the United Kingdom, and the compliance expectations moving into 2025.

Does the FCA Regulate Prop Firms in the UK? (The Legal Status)

Strictly speaking, most evaluation-based prop firms are not directly regulated by the FCA.
This is because they do not provide financial advice, brokerage services, or client fund management.
Instead, they sell access to simulated trading evaluations and offer payouts based on performance agreements.

Under UK law, a firm needs FCA authorisation only if it performs a regulated activity under the Financial Services and Markets Act (FSMA).
Since prop firms usually:

• do not handle client deposits,
• do not execute trades for the public,
• do not provide leveraged trading accounts to customers,

they typically fall outside the FCA’s direct supervisory scope.
However, a firm may still trigger FCA requirements if it:

• misrepresents simulated accounts as real-market trading,
• engages in unauthorised investment promotions,
• offers brokerage-like services without a licence.

This is why the FCA has recently increased its oversight of marketing practices, disclosures, and consumer protection standards in the prop trading niche.

Key FCA Guidelines Affecting UK Prop Trading Activities

Even though most prop firms are not directly authorised, the FCA still influences operations through advertising rules and conduct requirements.
Key touchpoints include:

1. Financial Promotions Regime

Any UK-facing advertisement must be fair, clear, and not misleading.
This means prop firms must accurately describe:

• the nature of funded accounts (simulated vs real),
• the risk of loss on evaluation fees,
• how payouts are generated,
• the rules that could result in account termination.

2. Consumer Duty Expectations

Although not formally applied to prop trading, the principles of Consumer Duty influence how firms communicate and treat UK users—especially regarding transparency, onboarding, and dispute handling.

3. Anti-Money Laundering (AML) and KYC Expectations

Prop firms offering payout services to UK residents are expected to maintain:

• identity verification (KYC),
• transaction monitoring,
• clear payout records.

4. Fair Contracting Standards

Unfair or unclear rules—particularly related to payout reversals, challenge resets, or hidden fees—may draw scrutiny under UK consumer law even without direct FCA licensing.

Prop Firms Used by UK Traders & Their Regulatory Status (Topstep, FTMO)

Here is the regulatory context for some of the most widely used global prop firms operating in the UK market:

Prop Firm	Regulatory Status	Notes
FTMO	Not FCA-regulated	Evaluation-based model; operates from the Czech Republic.
Topstep	Not FCA-regulated	Operates from the United States; provides futures-based evaluation trading.
The 5%ers	Not FCA-regulated	Registered in Israel; known for real-market execution for some programmes.
MyFundedFX / E8 / Funding Pips	Not FCA-regulated	All operate evaluation-based models without client fund management.

Currently, no major retail-facing prop firm holds an FCA licence.
This may change as the FCA strengthens oversight of retail trading programmes in 2025.

Trader Protection: How to Verify a Prop Firm’s FCA License

If a firm claims to be FCA-regulated, you can verify the licence in less than a minute through these steps:

1. Search the FCA Register

Visit the official FCA Register and search for:

• company name,
• FCA reference number (FRN),
• legal entity registered in the UK.

2. Confirm the Firm’s “Permissions”

A legitimate licence should include permissions such as:

• investment dealing,
• contract for differences (CFD) permissions,
• client money handling.

If a firm claims FCA oversight but none of these permissions appear, the claim is misleading.

3. Review the Firm’s UK Address & Contact Details

Regulated entities must publish a verified UK office location—not a virtual mailbox or offshore headquarters.

4. Check the FCA Warning List

If a prop firm is listed on the FCA Warning List, UK traders should avoid it immediately.

What Changes Are Expected in FCA Prop Firm Regulation for 2025?

The FCA has not yet announced dedicated prop firm legislation, but several developments suggest greater regulation is coming.
Here are the expected areas of focus for 2025:

1. Clearer Definitions for Evaluation Products

The FCA is exploring whether simulated evaluations should be treated as financial promotions, particularly when they resemble leveraged trading products.

2. Stricter Rules for UK Advertising & Influencer Promotions

The FCA has already tightened content rules for retail trading adverts. Prop firms are expected to fall under the same scrutiny, especially regarding:

• income claims,
• profit-sharing language,
• payout expectations.

3. Greater Oversight of Payout Services

As prop firms scale globally, regulators may require clearer audit trails for payouts to prevent AML risks and protect UK customers.

4. Standardised Disclosure Requirements

By 2025, the industry is likely to see mandatory disclosures covering:

• simulated vs real trading activity,
• challenge failure rates,
• maximum risk exposure,
• account termination rules.

While the prop trading model is still evolving, one trend is certain:
UK regulators are moving towards greater transparency, consumer protection, and oversight in 2025.