RegTech firm Muinmos has joined forces with technology provider Brokeree Solutions to tackle compliance and risk management challenges faced by regulated brokers in proprietary trading. This strategic partnership emerges as the financial industry grapples with ongoing debates about prop trading legitimacy and regulation.
Collaborative Solution: Muinmos and Brokeree Target Compliance Challenges
The partnership combines Brokeree's Prop Pulse platform's account management and risk mitigation capabilities with Muinmos' client onboarding technology. This integrated solution aims to equip FX brokers with comprehensive tools for maintaining regulatory compliance and risk control in their prop trading activities.
"While prop trading often faces skepticism in today's market, it represents a significant revenue opportunity for regulated brokers who implement proper controls and risk management," says Remonda Kirketerp-Møller, Founder and CEO of Muinmos. "Our joint solution enables firms to offer prop trading services that are both compliant and competitive."
Industry concerns about prop trading risks prompted this initiative. In a recent Finance Magnates interview, PipFarm's CEO James Glyde highlighted the complexity of managing these risks, describing them as "exceptionally challenging."
"Prop trading operates under fundamentally different mechanics compared to traditional CFD brokerage models with deposits and margins," Glyde explained. "You're faced with two options: transfer the risk to liquidity providers or assume it yourself. While the risks might appear similar, the underlying dynamics are quite distinct."
Muinmos and Brokeree claim to have developed solutions addressing these challenges, including reputational risks.
"We understand the concerns many regulated brokers have about potential reputational damage from offering prop trading services," notes Andrey Kamyshanov, Co-Founder and Managing Partner at Brokeree Solutions. "Our combined solution - leveraging Muinmos' compliance expertise and Brokeree's specialized account management system - provides regulated brokers with a robust framework to thrive in both current and future regulatory environments."
Both companies serve regulated brokers and emphasize their commitment to compliance. They aim to work alongside regulators to implement effective controls while preserving legitimate financial activities.
Traditional Brokers Embrace Prop Trading Opportunities
The prop trading sector, despite its controversial reputation, mirrors the evolutionary path of CFDs. Regulatory warnings about prop firms echo similar past concerns about traditional brokers.
While some warnings are warranted, particularly regarding unethical firms marketing prop trading as simple "gaming," the market includes reputable companies prioritizing trader safety and compliance.
CFD brokers are elevating industry standards in prop trading. Their regulatory expertise enables enhanced service levels and secure fund withdrawal processes.
The period from late 2023 to May 2024 saw five established CFD firms entering the market, including OANDA, Hantec Markets, IC Markets, and Axi.
Following this trend, other brokerage brands ventured into prop trading, including ThinkMarkets with their ThinkCapital initiative, offshore CFD broker AXE, and FundedBull, established by a former XM veteran.
Reference：Prop Trading Poses Image Hazard for CFD Brokers: These Two Firms Aim to Fix It
