Retail proprietary trading is no longer among the European Securities and Markets Authority’s (ESMA) immediate regulatory priorities, according to Cyprus Securities and Exchange Commission (CySEC) chairman George Theocharides, despite the sector’s rapid global expansion.

Speaking to Finance Magnates, Theocharides, who also chairs ESMA’s risk standing committee, said there are currently no substantial discussions underway on regulating the retail prop trading industry.

“To the best of my knowledge, ESMA is not currently engaged in any substantive discussions regarding retail prop trading,” Theocharides said.

His comments mark a shift from the regulatory stance seen over the past two years, when the sector had attracted growing attention in Paris amid suggestions that retail prop trading could eventually fall within the scope of MiFID II, particularly under provisions governing proprietary trading.

Just a year ago, Theocharides had described retail prop trading as being “on the radar”, but he indicated that the issue has since moved down the list of priorities.

“While the topic may be monitored as part of broader market developments, it does not appear to rank among the Authority’s immediate priorities, given the relatively limited size of the sector,” Theocharides said.

According to the report, ESMA declined to comment on the issue.

Finance Magnates said the absence of regulatory momentum comes despite strong growth in the retail prop trading market, with Google Trends data showing search interest increasing sharply across the United Kingdom, the United States and Germany over the past five years.

Germany recorded an increase of more than 1,050 per cent in searches for the term “prop firm”, reaching its highest level in February 2026.

The publication said much of the sector’s growth has been driven by younger traders attracted by the opportunity to trade with larger pools of capital without risking significant personal funds.

It also pointed out that Funding Pips and FundedNext were included in Deloitte’s 2026 Fast 50 ranking for the Middle East and Cyprus, highlighting the industry’s rapid commercial expansion.

At the same time, Finance Magnates said the business model remains legally ambiguous because many firms present themselves as educational or simulation platforms rather than regulated financial institutions.

The publication argued that the distinction is becoming increasingly blurred as more prop firms acquire brokerage operations or launch regulated trading businesses alongside their existing activities.

It cited acquisitions and new brokerage launches by firms including FTMO, The Trading Pit, Axi and ATFX as evidence of a growing convergence between proprietary trading firms and traditional retail brokers.

Finance Magnates also said the sector underwent significant upheaval after MetaQuotes withdrew access to MT4 and MT5 licences for prop firms in 2024, forcing many companies to migrate to alternative platforms or obtain brokerage licences.

According to data cited by the publication, around 100 prop firms ceased operations between early 2024 and late 2025, representing almost 14 per cent of the market.

The report added that industry data suggests only around 7 per cent of traders who purchase a trading challenge ultimately receive a payout, leaving many firms dependent on continual inflows of evaluation fees from unsuccessful participants.

Looking beyond Europe, Finance Magnates said regulatory developments in the United States appear to be moving more quickly, with several major American prop firms seeking registration with the Commodity Futures Trading Commission (CFTC) following enforcement action against My Forex Funds in 2023.

Despite the sector’s rapid evolution, Theocharides’ comments suggest that, for now, retail prop trading remains under observation rather than active regulatory review in Europe, although continued market growth or a major industry scandal could eventually bring the issue back onto ESMA’s agenda.