Two founders walk into the same bank in the same month. One runs a licensed CFD broker, the other runs a prop firm selling evaluation accounts on simulated trading. The broker gets a long questionnaire and a slow, structured process. The prop firm gets asked what it actually sells, cannot answer in a way the relationship manager can file, and is politely declined. Both are told the sector is high risk. The reasons behind those two decisions have almost nothing in common.
A broker is a category the bank already has
A licensed broker is legible to a bank. It holds an authorisation from a named regulator, and that authorisation carries obligations the bank can verify: client money must be held apart from firm money, reconciliations are performed on a defined cycle, audited accounts are filed, capital is maintained against permissions. The bank knows which account is the client money account and which is the firm's operating account, and it knows there is a rulebook governing the difference. Onboarding is still slow, and plenty of banks decline the sector entirely because of correspondent exposure, but the file makes sense. The mechanics are in client fund segregation and why banks refuse brokers.
What kills broker applications is usually jurisdiction and flow shape rather than the model itself. A firm licensed in a jurisdiction its correspondent treats as elevated risk, taking cards from consumers across many countries, with retail deposits arriving in small amounts and withdrawals leaving to third party wallets, is a monitoring burden. The bank is pricing the cost of watching that, and the driver behind most declines is correspondent banking de-risking, not an opinion about trading.
A prop firm is not that category at all
A prop firm selling evaluations does not usually hold client money in the regulatory sense. The fee a trader pays for a challenge is revenue for a service, and in most structures the trader is buying access to a simulated environment with a contractual reward if performance conditions are met. No leveraged positions with client capital, no segregated client money account, and frequently no financial services licence at all, because the activity is often characterised as something other than dealing in investments. Whether that characterisation holds is a live question in several jurisdictions and firms must take their own legal advice on it. See prop firm regulation and simulated trading disclosure.
From the bank's seat, that produces a different problem. The firm is not regulated, so there is no supervisor standing behind the file. Revenue arrives as many small consumer card payments, which reads as e-commerce. Money then goes out as rewards to individuals in dozens of countries, which reads as payouts. A business that takes consumer card revenue and pays individuals abroad is a shape that triggers questions about what is really being sold. If the answer sounds like a trading account, the bank hears an unlicensed financial firm. If it sounds like a game, the bank hears gambling. Neither hearing is good.
The single most useful thing a prop firm can do for its banking is describe itself accurately and consistently across its website, its terms, its merchant application and its bank forms. Firms that describe themselves one way to traders and another way to underwriters get found out at the first review, and inconsistency reads as concealment.
The payments side splits the same way
Card acquiring pushes the two models further apart. Acquirers assign merchant category codes and monitor chargeback ratios against scheme thresholds. A broker taking deposits is funding an account, and disputes tend to arrive as trading losses the cardholder regrets. A prop firm is selling a product with a pass or fail outcome, and disputes arrive as complaints about the outcome or the rules, which is a consumer protection argument rather than an investment one. Different dispute stories, different underwriting questions, same scheme thresholds. Chargeback ratio thresholds and high risk MCC codes cover the mechanics.
| Question the bank asks | Licensed broker | Prop firm on evaluations |
|---|---|---|
| Who supervises you | A named regulator with published permissions | Often no financial regulator, which the file must explain |
| Whose money is in the account | Client money, segregated and reconciled | Company revenue from service fees |
| What the inbound flow looks like | Deposits funding accounts | Consumer card payments for a product |
| What the outbound flow looks like | Withdrawals of client funds | Rewards paid to individuals across many countries |
| Main dispute type | Regret on trading losses | Disagreement over rules and outcomes |
What actually gets a prop firm banked
The firms that succeed do the unglamorous work. A clean corporate structure with identifiable beneficial owners and no shelf company history. Terms that state plainly that the accounts are simulated and that the reward is contractual. A refund and complaints policy that a reviewer can read in five minutes. Financial statements that show where the revenue comes from. An explanation of payouts that names the rails and the countries served. Most of that belongs in a single document pack, which is the subject of the bank account application pack, and the day to day reality is set out in the prop firm bank account reality.
Take the position early: a prop firm should not apply to banks as if it were a broker, and should not describe itself in language borrowed from licensed firms. Borrowed language invites the wrong file and the wrong questions. The other position worth holding is redundancy. One account and one acquirer is a business that stops the day a review goes badly, and reviews go badly for reasons that have nothing to do with the firm. Systems that let you route payments across more than one provider and keep the reconciliation straight are the practical answer, and that is what a prop firm CRM is for.
"A bank is not judging whether your business is good. It is judging whether it can describe your business to its own compliance committee in one paragraph. Write that paragraph for them."
— Roman Onta, Executive Director, SINGUARD
Key Takeaways
- A licensed broker fits an existing bank category: named supervisor, segregated client money, audited reporting. That file is slow but legible.
- A prop firm on evaluations usually holds no client money and often no licence, so the flow reads as consumer card revenue paired with cross border payouts to individuals.
- Acquirers judge the two models on different dispute stories but against the same scheme chargeback thresholds.
- Consistency between the website, the terms, the merchant application and the bank forms matters more than polish, and one account with one acquirer is a single point of failure.
Frequently Asked Questions
Why do banks treat prop firms differently from brokers?
A licensed broker fits an existing category: a named supervisor, segregated client money and audited reporting the bank can verify. A prop firm selling evaluations usually holds no client money and often has no financial services licence, so the bank sees consumer card revenue and outbound payments to individuals abroad without a supervisor standing behind the file.
Does a prop firm need a financial services licence to open a bank account?
Not necessarily, and requirements vary by jurisdiction and by bank. The absence of a licence is not automatically disqualifying, but it means the application has to explain the model clearly and consistently. Firms should take their own legal advice on whether their specific activity requires authorisation where they operate and where their clients are.
What is the fastest way to get a prop firm application declined?
Describing the business one way on the website and another way on the bank forms. Underwriters read both. Inconsistency between marketing language, terms of business and the application pack reads as concealment and usually ends the process without a second question.
About the Author
Roman Onta is an Executive Director at SINGUARD. He builds the Prop Firm CRM, the Broker CRM, Scalegram and CopySignals side by side with his brother Alex Onta, and he helped on the design of eTrader, the division Alex built and leads. His ground is worldwide payment processing, AML compliance and the corporate structures brokers are built on, work the two of them carry together, shaped by executive roles in the UAE and international corporates. He lives and works in Dubai for most of the year. Meet the executive duo leading Singuard's five divisions.