In a tense exchange that mirrored a sporting match more than a typical financial panel, two of the FX and CFD industry’s veterans faced off on whether the booming retail prop trading sector is a viable evolution of the market or a regulatory disaster in waiting.

The debate, held at the Finance Magnates London Summit (FMLS:25), pitted Drew Niv, Chief Strategy Officer (CSO) at ATFX, against Brendan Callan, CEO of Tradu.

By the end of the session, an audience that opened overwhelmingly in favour of the motion “Prop trading is good for the trading industry” had changed its mind and voted against it, handing a narrow win to the skeptic in the room.

You can watch the full debate here, and below the video you’ll find a play-by-play of how the sentiment shifted.

Kickoff: The Vote and The Value Proposition

[Minute 00:00 – 10:00]

The session opened with Jonathan Fine, the moderator, polling the room. The result was a landslide: 71% of the audience believed prop trading was net-positive for the industry.

Drew Niv opened the defense. Acknowledging the sector’s "Wild West" reputation, he drew parallels to the retail FX market of 1999. His argument hinged on the sheer volume of users the model attracts. Niv posited that prop trading solves the brokerage industry's most expensive problem: the cost of acquisition.

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"It’s that value proposition for the client that has drawn an audience, just in the last three years, that far surpasses the audience in the retail FX industry in terms of numbers," Niv said. He conceded the current economics are flawed but argued the influx of users creates a "great seeding ground" for future sophisticated traders.

It is worth noting that ATFX entered the prop-trading space in 2024. According to the company, some of the clients acquired through this channel were later converted into brokerage accounts.

Brendan Callan wasted no time tackling the opposition, dismissing the idea that these firms are proprietary trading operations at all. "As a company, you are what your revenue is. These companies – as bizarre as this is to say – sell demo accounts," Callan said.

Callan targeted the marketing tactics prevalent in the sector, referencing a specific advertisement featuring breakdancers and luxury cars.

"No offense to Honda, but if you’re going to pretend to be a baller, even the good people at Honda would suggest you try harder than that," he quipped, warning the audience that sending money to such firms is essentially "donating it to them".

Second Half: Arbitrage Tactics and Solvency Concerns

[Minute 10:00 – 25:00]

The debate intensified as the executives dug into the mechanics of the trade. Callan outlined a strategy he dubbed the "four-challenge arbitrage," detailing how traders can hedge positions across multiple accounts to game the system.

He argued that because the model relies on failure fees rather than market execution, firms are incentivized to deny payouts based on technicalities.

"They’re using other information... ‘You made too much of your profits on one single day’... Any slew of reasons they can come up with to deny profit-share payments," Callan argued, describing the environment as a "cesspool of cat-and-mouse gamesmanship".

Niv did not shy away from the flaws, admitting that the current "no risk, high reward" offers are unsustainable.

"It is mathematically unrealistically good, and therefore even I would say dishonest," Niv said. However, he maintained that capitalism would act as a "fixing mechanism," weeding out firms that fail to pay while the model matures into a legitimate funnel for regulated brokers.

Late Game: The “Ponzi” Allegations

[Minute 25:00 – 35:00]

The tone darkened during the Q&A session when the discussion turned to firm solvency. Responding to questions about firms delaying payouts, Callan read a written statement from The Funded Trader (TFT), which admitted being behind on profit payments for 3,300 people, some overdue for more than a year.

The statement said: “More revenues equals more payouts equals more testimonials equals more profit for TFT. More funds to pay back owed payouts and accounts leads to reputation restored.” Callan told the room this amounted to the firm acknowledging a Ponzi‑like structure: using new challenge fees to catch up on old obligations.

"He’s saying himself: I need to sell more challenges so I can pay the overdue payouts that I’m past due,” he added.

An audience member attempted to reframe prop trading as a "home game" of poker, a low-stakes environment for learning, compared to the "casino" of high-leverage brokerage accounts.

While Niv agreed that the "home game" appeal explains the traffic, Callan rejected the analogy, insisting that buying an option to "gamify a system" is not real trading.

Final Score: The Sentiment Flip Against Prop

[Minute 35:00 – End]

With time running out, Fine called for a second vote. The pre‑debate poll had shown roughly 71% in favor of the motion that prop trading is good for the trading industry and 29% against. After nearly 40 minutes of back‑and‑forth, live questions and a tour through everything from arbitrage tactics to regulatory loopholes, the post‑debate vote moved into “disagree” territory, with the audience deciding that prop trading is not, on balance, good for the industry.​

"After hearing Brendan making the case, after hearing Drew talking about the value for the industry, you have decided again that prop trading is not good for the industry," Fine announced, noting the "disagree" camp had taken the lead.

To close, he handed out a tongue‑in‑cheek hoodie reading: “I passed the FMLS prop debating challenge and the only payout I got is this hoodie,” before sending attendees off to the awards ceremony.

While the "prop" model continues to generate massive volume, the London debate suggests that industry insiders are becoming increasingly wary of the reputational risks and financial stability of the unregulated firms driving the trend.