Key terms, as published

• Challenge fee: $0. No evaluation exists; traders join as registered members of a broker-dealer.
• Capital contribution: not published. The risk disclaimer says only that one “will affect rates, payout and terms of the operating agreement.”
• Licensing: SIE exam plus Series 57, mandatory. The firm’s FAQ: “All Avatar traders are required to be registered and licensed.”
• Payout frequency: monthly, on the seventh business day of the following month.
• Profit split: not published. Deal structures “vary from trader to trader based on need”.
• Desk fees: $0 — “No desk fee / no hidden monthly fees”, fees “deducted as a top line expense before splits”.
• Members’ equity: $184,792,100 at 31 December 2025, per the audited statement filed with the SEC on 2 March 2026.
• Net capital: $104,446,653 against a $146,645 minimum — an excess of $104,300,008, at a ratio of 0.02 to 1.

What Avatar Securities actually is

Avatar is not a prop firm in the sense that phrase has acquired since 2020: no dashboard, no reset, no phase one. It is a Delaware LLC organised in May 2008, registered with the SEC as a broker-dealer under SEC# 8-67932 since 12 August 2008, and carrying CRD# 147763 on FINRA BrokerCheck. Its office is 148 Madison Avenue, New York, with a second trading floor in Chicago.

BrokerCheck records exactly one type of business: “Trading securities for own account”. There are no customers. The audit calls Avatar an “off floor proprietary securities trader”, trading since January 2009 and clearing through one broker, Wedbush Securities Inc.

The membership structure matters most. The audit identifies three classes: Class A “reserved for those members that actively manage the Company”, Class B for “those members that wish to become proprietary traders”, and Class C for members “that participate financially in one or more of the trading strategies”. A trader joins as a Class B member of an LLC — a wholly different legal position from buying an evaluation, and the structure covered in our reviews of T3 Trading Group and Chimera Securities. The public site carries roughly 3,455 characters of visible text and no terms document — normal for a firm that recruits by licence check, and a reminder that the register is where the terms live.

The $70,000 censure, in the regulator’s words

Avatar’s homepage sells four things. One of them is risk: “Multi-layer risk management controls designed to protect the firm and it’s members while allowing traders to thrive in any market condition.”

BrokerCheck carries one disclosure event in eighteen years — a Regulatory Event, status final. It was brought by the Chicago Board Options Exchange, not by FINRA, against Avatar as a CBSX trading permit holder. Initiated on 7 July 2011 across four file numbers — 11-0017, 11-0018, 12-0002 and 12-0003 — it was consolidated and resolved on 25 April 2013 by a Decision and Order on an Offer of Settlement. The sanction: a censure and a $70,000 fine, payable in twelve equal monthly instalments.

Six failures were alleged. The fifth reads directly against the homepage. From the CRD record, kept in capitals:

“AVATAR FAILED TO … (V) ADEQUATELY SUPERVISE ONE OF ITS CLASS B TRADERS WHO EXCEEDED HIS BUY AND SELL MAXIMUM ORDER LIMITS AND POSITION SIZE, AS WELL AS FAILED TO ENSURE ITS RISK MANAGEMENT TOOLS WERE FUNCTIONING PROPERLY”

The other counts are arguably more informative. Avatar was alleged to have failed to operate above its minimum net capital requirement, and to have failed to supervise the daily calculation that would have caught it; to have failed to register 136 of 158 associated persons by 11 January 2011; and to have missed insider-trading attestations from 35 of 170. Cited provisions include CBOE Rules 3.6A, 3.18, 4.2, 4.18, 13.1 and 15.1, plus Exchange Act Rule 15c3-1.

Two qualifications are owed. This was a settlement: Avatar’s filed statement records that it “NEITHER ADMITTED NOR DENIED THE VIOLATIONS ALLEGED IN THE STATEMENT OF CHARGES”. Nothing was adjudicated. And it is thirteen years old, and the only disclosure on the record. We could not retrieve the CBOE Decision and Order itself, so every figure above comes from the CRD record as published in BrokerCheck.

What the audited numbers say now

The counterweight to a 2011 net capital failure is a 2026 audit. Nineteen Form X-17A-5 reports sit on EDGAR under CIK 0001438956, unbroken from February 2009 to 2 March 2026. The latest was audited by Alperin, Nebbia & Associates, CPA, PA of Fairfield, New Jersey, auditor since 2016. Total assets were $321,256,995 against $136,464,895 of liabilities, leaving members’ equity of $184,792,100. Net capital was $104,446,653 against a $146,645 requirement — roughly 712 times the floor. Whatever happened in 2011, capital adequacy is not the current exposure.

One structural note. The technology Avatar uses “for risk management, order entries, and new trading strategy analysis” is licensed from Think Alpha Holdings, Inc., under common ownership with Avatar’s own Class A member, Avatar Trading Group LLC. Avatar paid $1,320,000 under that licence in 2025. Fully disclosed and not improper — but the risk controls the marketing sells are bought from a related party.

Payouts: what is published and what is not

Published. Distributions are monthly, on the seventh business day of the following month, and traders “are only paid by Avatar Securities directly” — no third-party processor, no payout portal. Fees come off as a top-line expense before splits, members receive a yearly Schedule K-1, and there is no desk fee. The firm reimburses Series 57 study material — the material, not the exam fee.

Not published, and we could not verify. The profit split. The capital contribution required to open a seat, or whether one is required at all. Buying power, leverage, daily loss limits, position-size caps, the commission schedule. The FAQ’s only word on economics is that traders “benefit from aggressive and flexible deal structures that vary from trader to trader based on need” — a negotiation, not a term sheet. Avatar publishes no audited payout data either.

The rules that decide whether you can trade here at all

Avatar has no trailing drawdown and no consistency rule, because it has no evaluation. The gate is regulatory, and it is a real one. Every trader must pass the SIE exam and then the Series 57. That is a sponsored registration: the firm files a Form U4 on your behalf, your disciplinary history becomes public on BrokerCheck, and a statutory disqualification ends the conversation. The 2013 settlement is instructive here too — one of its counts was Avatar’s alleged failure to check exactly that on two associated persons. Remote trading is available, but only “for approved associates who meet the registration and licensing requirements”.

How Avatar compares on capital you can verify

Every figure below comes from each firm’s own audited statement of financial condition to 31 December 2025, filed on Form X-17A-5.

Firm	CRD#	Net capital	Minimum required	Members’ equity
Avatar Securities	147763	$104,446,653	$146,645	$184,792,100
Great Point Capital	114203	$85,214,376	$126,600	$127,200,702
T3 Trading Group	154431	$27,191,437	$179,901	$35,570,095
Bright Trading	34702	$22,399,269	$100,000	$28,728,826

Avatar is the largest of the four by both measures. That ranking rests on one criterion — audited capital adequacy at a single date — and says nothing about splits or how a desk treats a trader in a drawdown, because none of the four publishes enough to rank on it. Our reviews of Great Point Capital and Bright Trading cover that other side.

Regulatory posture, and what registration does not protect

Avatar is regulated, a small minority in this category: SEC-registered, a FINRA member since February 2024 and a Nasdaq PHLX member since August 2014, supervised out of FINRA’s New York office. It holds no state registrations, normal for a firm with no customers. The FAQ has not caught up with the FINRA membership and still calls Avatar “a Nasdaq PHLX member firm”. Its chief compliance officer is Andrew Charles Browski, CRD# 5778834, in post since December 2023; the co-managing members are Raymond F. Holland and Omar Farooq Kathwari, both since May 2008.

What registration does not do is protect a trader’s money. Avatar states the point twice on its own site: “Traders are not brokerage customers and SIPC insurance coverage is not available.” SIPC protects customers of a failed broker-dealer. A Class B member is not a customer but an equity participant, and any capital contributed ranks as members’ equity, behind the firm’s creditors. The firm’s own description confirms the money is pooled: trading capital is “a combination of capital and retained profits from the members of the firm”.

FAQ

Does Avatar Securities charge a challenge fee?
No. Avatar sells no evaluation, no reset and no account. Traders join as registered members of an SEC-registered broker-dealer. The only cost is a capital contribution into the operating agreement, which the firm does not publish — only that one “will affect rates, payout and terms”.

What licences do I need?
The Securities Industry Essentials exam first, then the Series 57. Both are mandatory for every Avatar trader, remote ones included, and the firm sponsors the registration. Avatar reimburses Series 57 study material but does not say whether it covers the exam fee, which we could not confirm.

Is my money protected if Avatar fails?
Not by SIPC. Avatar states plainly that traders are not brokerage customers and that SIPC coverage is unavailable. Contributed capital sits in members’ equity, behind creditors. The comfort is the audited balance sheet — $104.4m of net capital against a $146,645 requirement at end-2025 — not an insurance scheme.

Has Avatar been disciplined?
Once. The Chicago Board Options Exchange censured and fined the firm $70,000 in a settlement resolved on 25 April 2013, covering 2010 and 2011 conduct including net capital, supervision, registration and books-and-records failures. Avatar neither admitted nor denied the allegations. It is the only disclosure on its BrokerCheck record.

This review is independent editorial analysis and is not financial, investment, or trading advice, and is not an endorsement or solicitation. The Industry Spread has no affiliate or referral relationship with the firms covered. Proprietary trading challenges carry a fee that is generally non-refundable, most participants do not reach a funded account, and funded capital is the firm’s capital, not the trader’s. Terms change frequently — always verify current rules directly with the firm before paying any fee.