New financial regulations coming into effect across the EU and UK in 2026 could significantly impact how prop trading firms operate and how funded traders receive payouts.
The key regulatory changes to watch:
EU Markets in Financial Instruments Directive (MiFID III) updates require prop firms operating in the EU to register as financial services providers. This affects firms like FTMO (Czech Republic) and FundedNext (UAE operations in EU).
UK Financial Conduct Authority (FCA) has issued guidance suggesting prop trading firms may need to apply for regulated status if they offer profit-sharing arrangements to retail traders.
What this means for traders: - More compliance requirements may increase challenge fees - Payout structures may need to change to comply with regulations - Some firms may exit EU/UK markets entirely - KYC requirements will become stricter
What to do right now: - Withdraw profits regularly rather than letting them accumulate - Keep records of all payouts for tax purposes - Diversify across multiple prop firms - Check if your prop firm is proactively addressing these changes
Most major firms including FTMO, FundedNext, and The5ers have legal teams monitoring these developments. We will continue to update this article as regulations evolve.