Prop trading firm Topstep has registered with the National Futures Association (NFA) as a Swap Firm and has been approved to operate as a Commodity Trading Advisor (CTA), according to recent regulatory filings. The filings show that Topstep applied to become an NFA member and to register as a Swap Firm and CTA at the start of last month.
The company received approval less than two weeks later to operate as an NFA member and was also cleared to act as a Swap Firm. Topstep subsequently obtained further approval to operate as a Swap Firm on May 2nd. The registrations are held by Topstep Advisory LLC, with Christopher Darak, who works in a compliance role at Topstep, listed as a Principal of the entity.
The precise objective of this regulatory setup remains unclear based on the available information. However, the changes at the firm came less than two weeks after a lawsuit was filed against Topstep by trader Vincent McCrudden in late March. In the lawsuit, McCrudden argues that Topstep is operating as an unregistered Commodity Pool Operator.
Topstep has been a notable name in the proprietary trading sector. It was launched in 2012 by ex-futures trader Michael Patak, who still owns the business today. The firm is described as arguably the first "modern" prop firm to set up, marking an early presence in the evolving proprietary trading space.
The recent NFA registrations and approvals position Topstep and its advisory entity within the established regulatory framework for swap activities and commodity trading advice. How these registrations will affect the firm’s business model or the lawsuit allegations is not specified in the available filings and court information.
