A retail prop trading start-up, Ascetic Capital, has shut down after just one week after making only four sales.
In a 3 December post on X (formerly Twitter), the firm revealed its failure to meet “even the most modest expectations” after its launch in November led to a breach of contract with its investors.
Its decision to shut down highlights risks in the retail prop trading space, in which firms typically offer funded trader programs to customers.
In fairness to Ascetic, the firm has been upfront about its problems, apologised and immediately committed to refunding “everyone”.
“To everyone who believed in us, supported us, and promoted our vision, we owe you a profound apology. You placed your trust in us, and we failed to deliver,” it said.
“We are initiating refunds for our customers immediately and ceasing our operations before even a single trader gets funded to mitigate the damage.”
We Are Refunding Everyone
It is with heavy hearts that we announce the closure of Ascetic Capital. Despite our hopes and meticulous planning, the launch did not meet even the most modest expectations. In our first week, we only made four sales, and this unexpected shortfall led…
— Ascetic Capital (@AsceticCapitalX) December 3, 2024
The problem with funded trader programs
While it seems the fallout from Ascetic’s failure will be limited, it highlights the uncertainty surrounding the retail prop trading sector.
The Good Money Guide has extensively written about the problems with the business model of funded trader programs.
In a previous article, our founder Richard Berry said: “Funded trader programs are dropping like flies and it’s no surprise why.
“At some point, they will be shut down because either A. the regulator will ban them, or B. the regulator will insist that they are regulated (and will therefore have to adhere to proper financial marketing practices).”
Retail prop firms relying on funded trader programmes aimed at aspiring outsiders differ from traditional proprietary (prop) trading businesses, associated with established financial institutions.
Institutional prop traders such as bank and asset management groups seek returns through investing company money, rather than the money of their clients, employing professional traders.
In the UK, proprietary trading can be a legitimate component of any company’s business model, as long as it meets regulatory requirements.
Robin has more than six years of experience as a financial journalist, most of which were spent at Citywire, and covers the latest developments in the investing, trading and currency transfer space. Outside of work, he enjoys reading literature and philosophy and playing the piano.
You can contact Robin at robin@goodmoneyguide.com
