Dubai crypto exchange steps into prop trading

Dubai-based cryptocurrency trading platform, CoinW Exchange, marked its sixth anniversary by announcing a rebranding initiative and launching a proprietary trading product.

The rebranding is described by the company as part of its evolution and commitment to growth in the digital trading market. Alongside this, CoinW has introduced a Prop Trading program that allows traders to use the company’s capital for financial transactions to gain profits directly.

Proprietary trading, commonly known as “Prop Trading,” is when a firm’s traders use the company’s own money to make trades instead of executing trades on behalf of clients. This model benefits traders by giving them access to a higher capital than their personal actual balance allow.

CoinW’s new prop trading service includes two participation modes: Starter and Hard, each with different levels of challenge and potential returns. These options are structured to cater to varying levels of trader expertise and risk tolerance. Both modes allow up to 5X leverage and impose no time constraints as long as traders remain within the allowed drawdown limits.

“We have a host of exciting plans in the pipeline that promise to revolutionize the way digital assets are traded. We hope CPT can bring more opportunities to talented traders who are short of fund. CoinW will be the place that they can truly shine,” the company said.

CoinW is not alone in this venture. The exchange is part of a growing list of firms that have launched a prop firm or funded trader program. Notable names in the FX industry such as IC Market,s Axi, Oanda, and Hantec Markets have already embarked on similar paths, alongside smaller entities like Raise FX and YaMarkets.

The sector, however, navigates a regulatory landscape that could be best described as a grey area. Most prop trading offerings, including that of IC Markets through, predominantly feature demo accounts. These accounts, designed for training and strategy testing purposes, are not subject to regulatory oversight in any jurisdiction, as far as current information allows.

By establishing prop trading firms, FX brokers diversify their revenue sources. Traditionally reliant on spreads and commissions, brokers can now also profit directly from successful trades executed by their proprietary traders. This not only boosts the firm’s income but also reduces its dependency on traditional revenue models subject to market volatility and competitive pressures.

A prop trading arm offers brokers better control over their risk exposure. It provides a mechanism to hedge against client positions or to manage the firm’s exposure to market fluctuations more strategically. This can lead to a more stable financial performance, even in volatile markets, by balancing risks through internal trading activities.