Multi‑Asset Proprietary Trading: Why Firms Are Going Beyond Forex
Proprietary trading is that type of trading when firms trade financial instruments using their own capital – is entering a new era. For years, many proprietary trading firms (or "prop firms") focused on a single market such as foreign exchange (forex). Today, however, leading prop shops are venturing into stocks, commodities, bonds, and even cryptocurrencies. The result is a multi-asset proprietary trading approach that offers broader opportunities and diversified risk. In this article, we explore why firms are expanding beyond forex, how multi-asset strategies are reshaping the proprietary trading landscape, and what this means for regulation, technology, and jobs in the industry.
Overview
| Category | Key Insight | Strategic Impact | Examples & Evidence |
|---|---|---|---|
| Diversified Risk & Returns | Trading across asset classes spreads risk and taps into uncorrelated returns; when one market is flat, another may be volatile with opportunities | Fundamental - Risk Mitigation | All-weather strategy maximizes profit potential across global markets during varying market conditions |
| Broader Market Opportunities | Multi-asset approach provides more trading setups to exploit across stocks, commodities, indices, crypto when currency markets are slow | High - Revenue Diversification | Firms can capture profits in multiple markets simultaneously rather than being limited to single asset performance |
| Talent & Client Attraction | Multi-asset firms appeal to wider pool of traders including stock, bond, and crypto specialists | High - Competitive Advantage | DNA Funded addresses stock trader needs in forex-prioritized industry; "extensive range of markets includes broad selection of global equities and indices" |
| Market Differentiation | Multi-asset capabilities have become selling point for prop platforms, providing competitive edge in crowded space | High - Market Positioning | EBSWare evolution: "introduction of U.S., Hong Kong, and Indian stock trading provides brokers expanded tools to attract wider audience" |
| Global Market Examples | Leading firms demonstrating successful multi-asset expansion across regions | Proven - Market Validation | FTMO (Czech): forex to indices/crypto; Susquehanna International Group: trades across nearly every asset class including options, equities, commodities, energy, cryptocurrency |
| Cross-Asset Arbitrage | Complex strategies spanning multiple markets: cross-asset arbitrage, global macro trades, relative value strategies | High - Profit Innovation | Ability to long one asset while shorting another capitalizes on inter-market dynamics unavailable to single-asset firms |
| Scale & Liquidity Benefits | Multi-asset firms can scale by participating in more markets, achieving greater liquidity and turnover | High - Capital Efficiency | Jane Street: ETF-focused to major player in equities, bonds, options trading on 200+ exchanges worldwide |
| 24-Hour Global Reach | Multi-asset firms engage exchanges worldwide, trading Wall Street/Chicago by day, Asian/European markets by night | High - Operational Scope | Global reach means nearly round-the-clock activity but requires understanding diverse market structures and regulations |
| Emerging Asset Integration | Multi-asset strategies pushed firms to include cryptocurrencies as natural extension of trading acumen | Medium - Market Evolution | Jump Trading, DRW began crypto trading late 2010s; now many prop firms offer crypto alongside forex/stocks |
| Adaptive Resilience | Multi-asset firms can pivot to wherever action is rather than being tied to one market's fortunes | Fundamental - Business Continuity | Examples: XR Trading (fixed income to derivatives leader), Tower Research Capital (automated strategies across asset classes) |
| Unified Trading Platforms | Integrated platforms handling multiple asset classes enable seamless multi-market operations | High - Operational Efficiency | MetaTrader 5 for multi-asset access; EBSWare xTrader enables U.S., Hong Kong, Indian stocks alongside forex |
| Advanced Data Analytics | High-performance databases and AI/ML tools process enormous data volumes across different time zones for real-time signals | Critical - Decision Support | Kx Systems kdb+ used by Sun Trading; AI models predict simultaneous moves in bond futures and currency pairs |
| Automated Execution | Algorithmic trading and smart order routing enable efficient execution across multiple markets within milliseconds | Critical - Performance Edge | Hudson River Trading: 800+ engineers/mathematicians developing algorithms for 200+ markets |
| Risk Management Systems | Sophisticated software monitors real-time exposures across asset classes with scenario analysis and auto-liquidation capabilities | Critical - Risk Control | Custom risk dashboards provide instant firm-wide P&L and risk views; stress testing simulates cross-market impact of shocks |
| Global Collaboration Tech | Cloud infrastructure enables 24/7 operations with teams across globe collaborating on shared platforms | High - Talent Access | Firms can hire best talent regardless of location; enables diverse, round-the-clock operations aligning with multi-asset global nature |
| Adaptive Strategy Development | Continually explore new asset classes strategically, starting with strengths and testing before scaling | Strategic - Growth Planning | Example: Forex-focused firm adding equity indices/gold as first step; foster culture encouraging multi-asset strategy proposals |
| Technology & Talent Investment | Upgrade infrastructure for low-latency, high-volume performance; hire skilled quants, developers, analysts | Critical - Competitive Foundation | Provide cross-training (FX traders learning options pricing, developers learning new APIs); firms are as much tech companies as trading companies |
| Proactive Compliance | Engage legal advisors for licensing requirements; implement strong internal policies even in loosely regulated areas | High - Regulatory Preparedness | Rigorous KYC checks for funded traders; clear market abuse prevention rules; signals professionalism to attract institutional capital |
| Learning Culture Development | Foster continuous learning and cross-desk collaboration; encourage knowledge sharing and innovative thinking | Strategic - Innovation Driver | Internal seminars (commodities desk teaching oil dynamics, equities desk sharing options Greeks); cross-pollination sparks intersection strategies |
| Industry Evolution Reality | Multi-asset proprietary trading is new normal; firms that adapt thrive while single-market firms risk being left behind | Fundamental - Survival Imperative | "Going beyond forex is no longer optional, but a defining characteristic of the new era of proprietary trading" |
Why Proprietary Trading Firms Are Expanding Beyond Forex
It is very difficult to pick any one factor and explain why the prop trading firms are routing otherwise beyond forex. Hence, here are a couple of factors that together can help to find an answer concrete enough for this question-
Diversified Risk & Returns
Trading across asset classes (equities, commodities, indices, crypto, etc.) spreads risk and taps into uncorrelated returns. When one market is quiet or trending flat, another may be volatile and ripe with opportunity.
Broader Market Opportunities
A multi-asset approach means more trading setups to exploit. For example, a firm can capture profit in stock indices or commodities when currency markets are slow, and vice versa. This "all-weather" strategy helps maximize profit potential across global markets.
Attracting Talent & Clients
Multi-asset prop firms appeal to a wider pool of traders. Stock, bond, or crypto specialists may join prop firms that offer their preferred instruments, whereas a forex-only firm might miss out on that talent. "DNA Funded's extensive range of markets includes a broad selection of global equities and indices. In an industry that often prioritizes forex and commodities, DNA Funded addresses the needs of stock traders," says Noam Korbl, co-founder of Prop-Firms.com. In other words, offering more than just forex helps prop firms draw in skilled traders from various backgrounds.
Competitive Edge
Firms that go multi-asset can differentiate themselves in a crowded prop trading space. Being able to trade everything from currency pairs to commodities and crypto gives an edge in flexibility. As William Douglas, CEO of fintech firm EBSWare, puts it: "The evolution of proprietary trading is shifting beyond forex. With the introduction of U.S., Hong Kong, and Indian stock trading, we are providing brokers with an expanded set of tools to attract a wider audience of traders." Multi-asset capabilities have become a selling point for prop platforms and programs.
Global examples underscore this trend. In Europe, firms like FTMO (Czech Republic) started by funding forex traders but later added stock indices and cryptocurrencies to their programs. In the U.S. and Asia, established proprietary trading houses now trade a spectrum of assets. For instance, Susquehanna International Group (SIG) – one of the largest prop trading firms in the world – specializes in derivatives and trades across nearly every asset class, including options, equities, commodities, energy and cryptocurrency.
Multi-Asset Strategies Transforming the Proprietary Trading Landscape
The shift to multi-asset proprietary trading is not just a change in what is traded – it's changing how firms operate. Multi-asset strategies are transforming the prop trading landscape in several ways:
1. New Trading Strategies
Proprietary traders can deploy complex strategies that span multiple markets. Some firms pursue cross-asset arbitrage (finding price discrepancies between, say, a stock index and a currency), global macro trades, or relative value strategies that require trading different asset classes simultaneously. This has opened up profit avenues that a single-asset firm could never access. The ability to long one asset while shorting another allows prop firms to capitalize on inter-market dynamics.
2. Technology and Data Analytics
Managing a multi-asset portfolio demands robust technology. Firms must process huge volumes of market data across equities, FX, derivatives, and more. "In the rapidly evolving world of quantitative trading, firms need to be resilient in adapting to each new development, processing higher volumes of data faster and driving comprehensive real-time analytics," says Fintan Quill of Kx Systems. High-performance trading platforms and analytical databases (like Kx's kdb+ used by prop firms) enable traders to monitor global markets tick-by-tick and execute strategies in real time.
3. Scale and Liquidity
Multi-asset prop firms can scale up by participating in more markets. This often means greater liquidity and turnover. A firm trading stocks, bonds, forex, and crypto can put more capital to work at any given time than a firm trading a single asset class. For example, a prop firm might have trading desks for equities, fixed income, commodities, and currencies all contributing to overall profits. This multi-desk model has turned some prop firms into global trading powerhouses. Jane Street, for instance, started as an ETF-focused firm but has become a major player in equities, bonds and options, trading on over 200 exchanges worldwide. Such breadth cements these firms' roles as key liquidity providers across markets.
4. Global Reach
By going beyond forex, proprietary traders are engaging with exchanges and markets around the world. A multi-asset prop trading outfit might trade on Wall Street and Chicago exchanges by day, and Asian and European markets by night (taking advantage of 24-hour market cycles). This global reach means prop firms are active nearly around the clock. It also means they must understand diverse market structures and regulations (for instance, stock trading in India or crypto trading on a European exchange). Accessing global markets has become easier with electronic trading platforms and partnerships. As William Douglas notes, adding access to U.S., Hong Kong, and Indian stock markets in a prop trading platform expands opportunities for traders and firms alike.
5. Inclusion of Emerging Assets
Multi-asset strategies have pushed prop firms to include new asset classes like cryptocurrencies. In the late 2010s, major prop players like Jump Trading and DRW began trading crypto internally. Now, many prop firms (even those funding retail traders) offer crypto alongside forex and stocks. While crypto is volatile and evolving in regulation, firms see it as a natural extension of multi-asset trading – another arena where they can apply their trading acumen. The rise of crypto trading within prop firms is a prime example of how multi-asset flexibility helps them adapt to market trends.
Overall, multi-asset proprietary trading has made firms more adaptive and resilient. They can pivot to wherever the action is – whether that's a surge in commodity prices or a stock market swing – rather than being tied to one market's fortunes. This agility is increasingly crucial in an era where global markets are interconnected. A development in one asset class (like an interest rate change) can ripple into currencies, stocks, and commodities. Prop firms with a multi-asset view are better positioned to seize such cross-market opportunities or manage the risks arising from them.
To illustrate the evolving landscape, consider how some proprietary firms now describe themselves and their capabilities:
- A Chicago-based firm XR Trading, which started in 2002 in fixed income, is now "a leader in the derivatives marketplace" and provides liquidity across global futures, equities, commodities, options and cryptocurrency markets.
- Tower Research Capital, a high-frequency trading company, trades across a wide range of asset classes using automated and quantitative strategies.
- Europe's Optiver and IMC trade everything from options and ETFs to bonds and foreign exchange, using sophisticated models.
- Even specialized firms like Wolverine Trading (Chicago) that once focused on options now act as market makers in equities, futures, ETFs, and bonds.
The proprietary trading landscape is clearly moving toward multi-asset integration as the standard. Prop firms that remain single-asset focused (for example, only forex) face the risk of missing out on growth areas and could fall behind in performance.
Regulatory Shifts Reshaping Proprietary Trading
| Regulatory Area | Key Insight | Impact Level | Current Status & Implications |
|---|---|---|---|
| Post-2008 Banking Reforms | Volcker Rule (Dodd-Frank Act) prohibited large banks from proprietary trading for profit, forcing shutdown/spinoff of prop trading desks | High - Transformational | Created exodus of bank traders; 75-80% of 2010s prop firm growth attributed to Volcker rule displacement |
| Independent Prop Firm Rise | Non-bank entities filled gap left by exiting bank prop desks, becoming dominant multi-asset prop trading model | High - Market Restructuring | Most current multi-asset prop firms are non-bank entities founded by former bank traders |
| EU Regulatory Framework | MiFID II and Investment Firms Regulation (IFR) treating larger prop firms like traditional investment firms | Medium - Compliance Burden | Higher capital requirements and oversight for larger EU prop trading operations |
| Prop Funding Programs | Regulatory debate over whether prop funding programs constitute unregulated brokerage or investment products | Medium - Regulatory Uncertainty | Ongoing regulatory discussions about classification and appropriate oversight of talent development firms |
| Cryptocurrency Trading | Complex regulatory landscape: lenient spot crypto trading vs. tight crypto derivatives policing in US | Medium - Asset-Specific Rules | Multi-asset firms must navigate varying crypto regulations across different product types |
| Multi-Jurisdictional Compliance | Multi-asset prop firms must navigate securities laws, commodities regulations, and forex rules across multiple countries | High - Operational Complexity | Requires expertise in diverse regulatory regimes for different asset classes and jurisdictions |
| Client vs. Prop Distinction | Regulators enforce strict separation between proprietary trading and client-focused activities | Medium - Compliance Requirement | Banks must prevent mixing; independent prop firms have advantage with 100% proprietary focus |
| Compliance Advantages | Independent prop firms have simpler compliance (no client suitability/disclosure requirements) | Medium - Competitive Advantage | Pure proprietary trading model reduces regulatory burden compared to client-serving institutions |
| Jurisdictional Strategy | Prop firms choosing favorable jurisdictions (London, Singapore, Dubai) for operational flexibility | Medium - Strategic Planning | Geographic arbitrage becoming important factor in prop firm establishment and operations |
| Emerging Oversight | Regulators increasingly aware of prop trading sector growth, potential for new direct regulations | Emerging - Future Risk | Discussions about specific licensing categories for trader-funding firms; industry preparing for potential new rules |
| Industry Self-Regulation | Industry groups adopting voluntary codes of conduct to preempt heavy regulation | Emerging - Proactive Measure | Voluntary standards being developed to demonstrate industry responsibility and avoid restrictive oversight |
| Compliance Agility Requirement | Multi-asset prop firms must maintain agility in both trading and compliance across all markets | High - Operational Imperative | Success requires robust risk management, transparency, and ability to adapt to new regulations quickly |
| Global Regulatory Monitoring | Finance professionals must monitor regulatory developments across every market they trade | High - Continuous Requirement | From forex leverage caps to crypto licensing, comprehensive regulatory intelligence essential for operations |
Technology Driving Multi-Asset Prop Trading Evolution
Technology has been a key enabler of the multi-asset revolution in proprietary trading. Modern prop trading simply couldn't span so many markets without cutting-edge tech tools:
Unified Trading Platforms
Today's prop traders often use integrated platforms that handle multiple asset classes. For example, MetaTrader 5 (MT5) is popular for being multi-asset (covering forex, CFDs on stocks and commodities, etc.), while institutional firms might use custom platforms connecting to stock exchanges, futures exchanges, and crypto venues all in one screen. It can also be seen that fintech providers offer white-label solutions: EBSWare's xTrader platform, for instance, allows brokers to run trading challenges on U.S., Hong Kong, and Indian stocks alongside forex. The availability of such tech means even smaller firms can offer multi-asset access without building everything from scratch.
Data and Analytics
Multi-asset trading generates enormous amounts of data – tick prices, order books, news feeds – across different time zones. Prop firms rely on high-performance databases and analytics tools to crunch this data for signals. Kx Systems' kdb+ (a time-series database) is one example, used by firms like Sun Trading to analyze real-time data and deploy strategies quickly. Proprietary trading firms also invest in machine learning and AI to detect patterns in data that humans might miss. A firm might run an AI model to predict short-term moves in bond futures and currency pairs simultaneously, for example. Without powerful computing and algorithms, managing a multi-asset strategy would be chaotic. With them, a small team of quants can oversee a global, multi-market portfolio from one trading floor.
Automation and Execution Speed
While expanding beyond forex reduces reliance on pure speed (HFT) in one market, execution still matters. Automated trading algorithms and smart order routing help prop firms trade efficiently in each market. If a trading signal triggers, the system might automatically execute a stock trade on NYSE, a forex trade on a liquidity provider, and a crypto trade on an exchange – all within milliseconds. Such algorithmic trading is standard now. As one example, Hudson River Trading (a major quantitative firm) attributes much of its success to developing advanced automated algorithms; it employs over 800 engineers, mathematicians and statisticians to refine these systems for trading on more than 200 markets. This highlights how critical tech talent and infrastructure are in prop trading: the firm's multi-asset reach is directly supported by its technology expertise.
Risk Management Systems
Technology also underpins risk control in multi-asset prop trading. With positions open across different asset classes, risk management is complex. Sophisticated software monitors exposures in real time, flagging if the firm's aggregate risk to, say, interest rates or a particular currency exceeds limits. Scenario analysis and stress testing tools simulate how a shock (e.g., a sudden rate hike, or a geopolitical event) would impact all assets in the portfolio. Many prop firms develop custom risk dashboards to get an instant view of firm-wide P&L and risk by asset class. This is essential for decision-makers to know when to cut losses or reduce positions. Modern risk tech can even auto-liquidate or hedge positions if needed, something manual risk processes could not handle fast enough.
Collaboration and Remote Trading
Another tech-driven change is the ability for prop trading teams to collaborate across the globe. A multi-asset firm might have quants in London, traders in Chicago, and developers in Singapore, all connected on shared platforms and communication tools. Cloud-based infrastructure allows 24/7 operation and remote access to trading systems, which became especially important during recent years (e.g., when traders had to work from home). This has broadened the talent pool – a prop firm can hire the best algorithm developer or trader regardless of location, knowing they can connect securely to the trading systems. The result is a more diverse, round-the-clock operation, aligning well with multi-asset trading's global nature.
In essence, technology is the great enabler that allows proprietary trading firms to go beyond forex and manage the complexity that comes with multi-asset portfolios. Finance professionals eyeing the prop trading space should note that firms often consider themselves as much tech companies as trading companies. The competitive edge often comes from better code, faster networks, and smarter analytics. As multi-asset trading grows, we can expect even more investment in tech like ultra-low latency connections, machine learning-driven strategy generation, and perhaps digital assets infrastructure as crypto becomes mainstream. Those prop firms that harness technology most effectively are likely to dominate this multi-asset era.
Conclusion: Actionable Insights for the Prop Trading Era
Multi-asset proprietary trading is more than a trend – it's the new normal for the industry. Firms that adapt to this reality stand to thrive, while those stuck in one market may get left behind. Here are some actionable insights and closing thoughts for finance professionals regarding this shift:
Embrace Adaptive Strategies
Proprietary trading firms should continually explore new asset classes and markets, but do so strategically. Start by leveraging strengths – for example, a forex-focused firm might add equity indices or gold trading as a first step. Test new strategies in a limited way before scaling up. The ability to pivot and capitalize on emerging opportunities (like a new crypto product or a volatility spike in an exotic market) will distinguish the winners. Firms should foster a culture where traders are encouraged to propose and pilot multi-asset strategies, backed by robust risk assessment.
Invest in Technology and Talent
It cannot be overstated – investing in high-quality technology and talent is critical. This means upgrading trading infrastructure for low-latency, high-volume performance and ensuring data from all markets is seamlessly integrated. It also means hiring skilled quants, developers, and analysts who can build and maintain the systems and models for multi-asset trading. For existing staff, provide training to upskill them in new areas (e.g., teach a FX trader the basics of options pricing, or have developers learn about a new exchange's API). A firm is only as good as its people and platforms, so these investments pay long-term dividends in an ever-more competitive prop trading arena.
Proactive Risk and Compliance Management
With regulatory changes on the horizon, prop firms should be proactive about compliance. Engage legal advisors to understand which licenses might be needed if you expand into a new product (for instance, trading securities could trigger broker-dealer registration in some jurisdictions). Implement strong internal policies – even if operating in loosely regulated areas – such as rigorous KYC checks for any external traders you fund and clear rules to prevent market abuse. Proactively adopting best practices can also serve as a signal of professionalism, which might attract institutional capital or partners down the road. In terms of risk, continuously refine your risk models to account for cross-asset correlations; the events of recent years have shown that stress in one market can quickly spread, so scenario planning is vital.
Foster a Learning Culture
The firms that excel in multi-asset trading often foster an environment of continuous learning and collaboration. Encourage traders and researchers to share knowledge across desks. For example, host internal seminars where the commodities desk explains oil market dynamics to the rest of the team, or the equities desk shares insights on options Greeks that could also apply to FX options. This cross-pollination of knowledge can spark innovative strategies at the intersections of asset classes. Likewise, be open to new ideas – the next profitable strategy might come from a junior quant analyzing alternative data or a trader who spots a pattern between tech stocks and cryptocurrency movements. A nimble, curious, and informed team will keep your proprietary trading enterprise ahead of the curve.
In conclusion, multi-asset proprietary trading represents an exciting evolution in the trading world. It aligns with a more interconnected global market and offers prop firms multiple engines for growth. For finance professionals, it means a more dynamic career landscape – one where expertise in markets and technology can be applied in creative ways. Whether you're running a prop desk or aspiring to join one, success will hinge on adaptability, innovation, and a solid foundation of risk management. As markets continue to change, the firms that go beyond traditional boundaries and leverage a multi-asset approach are likely to reap the rewards in performance and resilience. The message is clear: going beyond forex is no longer optional, but a defining characteristic of the new era of proprietary trading.