Document TIB-FRM-PF-1.0
Issued 16 April 2026
Module of TIB-FRM-1.0
Verification Module — Proprietary Trading Firms
Twenty-four binding criteria added to the universal Standards (TIB-IS) for verification engagements with proprietary trading firms operating evaluation programmes, funded-trader accounts, or proprietary capital allocated to external traders.
© 2026 Stratinova LTD. All rights reserved.
About this module
This module (the PF Module) is a type-specific extension of the TIB Standards Library applicable to proprietary trading firms. A proprietary trading firm, for the purposes of this module, is any entity whose business model includes the operation of trader-evaluation programmes, the allocation of proprietary capital to external traders under documented programmes, or the operation of funded-account products in which a participant trades simulated or proprietary capital and receives a contractual share of profits.
The module adds twenty-four binding criteria (PF-1 through PF-24) organised under seven themes: programme design, rule-enforcement parity, demo-vs-live execution, payout integrity extensions, breach behavioural framework, anti-abuse rule scope, and lifecycle mechanics (buyback and scaling). These criteria are added to — never substituted for — the universal pillars and thirty universal criteria published in TIB-IS-1.0.
The module was prepared by the TIB Standards Committee with reference to observed industry practice across the proprietary trading sector during 2024-2026. Application of the module is mandatory whenever the engagement scope includes activities described in the first paragraph above.
Verification Module — Proprietary Trading Firms
Twenty-four binding criteria with rationale, requirement, evidence rubric, illustrative cases, and cross-references to international standards.
Scope
This Module applies whenever an engagement covers a Firm whose activities include (a) the operation of trader-evaluation programmes, (b) the allocation of proprietary or simulated capital to external traders under documented programmes, or (c) the operation of funded-account products under which an external trader receives a contractual share of profits.
Joint application
Where the Firm also operates regulated brokerage activity, the Brokers Module (TIB-FRM-BR) is invoked jointly. Where the Firm holds participant funds beyond evaluation fees, the Custodians Module (TIB-FRM-CU) is invoked jointly. Joint module application is recorded on the Cover Page and in the Engagement Scope section of the Audit Report.
Out of scope
This Module does not assess investment-strategy quality, expected returns, or commercial pricing of evaluation fees. It is concerned exclusively with operational integrity of the published programmes and the consistency between published rules and observed practice.
Definitions
For this Module, the following terms apply in addition to those defined in TIB-FRM-1.0 § 3 and TIB-MTH-1.0 § 2.
- Programme — a published evaluation, funding, or subscription product offered by the Firm.
- Participant — an external trader who has purchased, subscribed to, or is otherwise enrolled in a Programme.
- Funded Account — an account on which the Participant trades simulated or proprietary capital and is entitled to a contractual share of profits.
- Breach — the occurrence of a published condition under which the Participant's account is closed, restricted, or denied a payout.
- Buyback (or Reset) — the Firm's offer to reinstate a breached account on payment of a fee.
- Scaling — an automatic or rule-based increase in account size triggered by Participant performance.
- Profit Split Ladder — a published progression of profit-share ratios over the Participant lifecycle.
- Server-Side Rule — a rule enforced by the Firm's trading-platform configuration without Participant action required.
Theme map
| Theme | Criteria | Universal pillar | Section |
|---|---|---|---|
| Programme design | PF-1 through PF-4 | TIB-IS.6 Disclosure | § 4 |
| Rule-enforcement parity | PF-5 through PF-7 | TIB-IS.3 Execution | § 5 |
| Demo-vs-live execution | PF-8 through PF-10 | TIB-IS.3 Execution | § 6 |
| Payout integrity extensions | PF-11 through PF-14 | TIB-IS.4 Payout | § 7 |
| Breach behavioural framework | PF-15 through PF-17 | TIB-IS.6 Disclosure | § 8 |
| Anti-abuse rule scope | PF-18 through PF-20 | TIB-IS.6 Disclosure | § 9 |
| Lifecycle mechanics | PF-21 through PF-24 | TIB-IS.4 Payout / TIB-IS.6 Disclosure | § 10 |
Programme design
Programme-design criteria assess whether the published evaluation, funding, and continuation pathways are internally consistent, observable to a prospective Participant before purchase, and free of bait-and-switch mechanics.
Programme parameter consistency across sources
Inconsistency between the FAQ, programme landing page, and binding terms creates ambiguity that systematically benefits the drafting party. Internal consistency is the minimum threshold for "published rules" to be meaningful.
All numeric parameters of every Programme — profit targets, drawdown limits (initial / trailing / static), leverage, time limits, minimum trading days, minimum trading sessions, profit splits, scaling triggers, payout cycles, instruments permitted — shall be reconciled across the FAQ, the per-Programme landing page, and the binding Terms & Conditions. Where Programmes are advertised in multiple jurisdictions, parameters shall be reconciled across jurisdictional variants.
Pre-purchase rule disclosure
A Programme rule that is only accessible after payment cannot inform the purchase decision. Pre-purchase visibility of the full rule set is a non-negotiable condition of meaningful consent.
The full binding rule set of each Programme shall be accessible to a prospective Participant without payment, login, account creation, email-gated download, or "available on request" qualifier. Material rules behind any of those mechanisms shall be deemed not pre-disclosed.
Drawdown methodology disclosure
Drawdown is the single most consequential numeric parameter for funded-account Participants. Subtle differences in drawdown methodology (basis, reference, reset events, close-of-day timing) materially change the practical risk envelope.
Drawdown computation for every Programme shall be unambiguously specified including: (a) basis — initial balance, trailing from highest balance, or static; (b) reference — balance, equity, or floating equity; (c) reset events — at end-of-day, on profit milestones, or never; (d) close-of-day timing — broker time-zone reference. Methodology is published on the Programme landing page in plain language alongside an example calculation.
Programme version control
Programme rules change over time. Without versioning, a Participant cannot determine which rules apply to their account, and the Firm cannot demonstrate that rules in force at purchase have been honoured.
Every Programme shall carry a version identifier and an effective date. The version in force at the date of Participant purchase shall apply to that Participant's account for the lifecycle of the Programme, unless the Participant accepts a subsequent version. A historical archive of programme versions shall be available on request.
Rule-enforcement parity
Parity between published rules and server-side enforcement is the single most testable integrity signal in this entity type. Discretionary enforcement creates the largest risk of differential treatment.
Server-side parity testing
A rule that is enforced inconsistently by the trading platform is not a rule. Server-side enforcement converts the rule into a consistently applied condition that the Firm cannot bend after the fact.
Every numeric breach threshold (max drawdown, daily drawdown, profit target, time limits, minimum trading sessions) shall be tested against TIB-supervised demo or sandbox accounts on the Firm's production platform. Recorded delta between published value and observed enforcement shall be zero, or the deviation shall be investigated and explained.
Discretionary breach decisions
Some breach grounds (behavioural rules, gambling clauses, news-event prohibitions) are inherently judgement-based. The integrity question is whether judgement is exercised consistently against published criteria, or arbitrarily.
Where the Firm reserves discretion to declare a Breach, (a) the criteria for exercise of discretion shall be documented; (b) the volume of discretionary Breaches shall be recorded; (c) a sample of recent discretionary Breaches shall demonstrate consistent application against the documented criteria; (d) the Participant shall be given the documented reason for any discretionary Breach affecting their account.
Selective enforcement detection
A pattern in which rules are enforced more frequently against profitable Participants than against losing Participants is direct evidence of integrity failure. The pattern is observable from breach statistics.
Breach incidence shall be analysable across Participant cohorts (profitable, breakeven, losing). Where the rate of discretionary Breach is materially higher among profitable Participants than among losing Participants for the same behaviour pattern, the Firm shall provide a documented explanation. The absence of such an explanation in the face of the pattern is itself a Material Finding.
Demo-vs-live execution
Where the Firm advertises that funded-account execution conditions match evaluation conditions, the equivalence is verifiable. Material divergence creates a perverse incentive: Participants who pass evaluation under favourable conditions face adverse execution on the funded account.
Execution venue equivalence
Same liquidity, same spread profile, same slippage methodology between evaluation and funded accounts is the basis on which a Participant can rely on evaluation performance as predictive of funded-account performance.
Where the Firm advertises that funded-account execution conditions are equivalent to evaluation execution conditions, the same liquidity feed, spread profile, and order routing shall apply on both sides. Material divergence (different venues, different LP set, different platform-side controls) requires explicit pre-purchase disclosure.
Slippage profile parity
Slippage favouring the Firm on funded accounts is a hidden cost that Participants cannot price into their strategy. Evaluation-funded slippage parity converts the published evaluation experience into a reliable predictor of funded experience.
Slippage profile (mean, distribution, asymmetry) shall be measured on both evaluation and funded accounts. Material divergence requires disclosed rationale. Asymmetric slippage that systematically disadvantages the Participant on the funded side is a Material Finding regardless of disclosure.
Stop-out behaviour parity
Where automated stop-outs operate (margin, drawdown, daily loss), the trigger logic must operate identically on evaluation and funded sides. Asymmetric trigger logic creates a hidden disadvantage for funded Participants.
Automated stop-out and breach-detection logic shall operate identically on evaluation and funded accounts. Where logic differs by design (e.g. funded accounts subject to additional risk controls), the difference is documented and disclosed pre-purchase.
Payout integrity (extensions)
This theme extends pillar TIB-IS.4 with criteria specific to participant claims under funded-account programmes.
Profit-split-ladder consistency
Where profit splits change over the Participant lifecycle (e.g. 50% → 70% → 80%), the trigger conditions must be unambiguous, deterministic, and applied without discretion. The pattern of "ladder up but never down" creates a contractual expectation.
The Profit Split Ladder for every Programme shall: (a) state the trigger for each rung in observable terms; (b) be deterministic — no discretion in advancement; (c) preserve gained rungs unless the Participant breaches and is reinstated, in which case ladder reset is permissible only if disclosed pre-purchase.
Payout method optionality and reliability
Single-payout-method dependence concentrates failure risk and gives the Firm leverage over Participant choices (e.g. forcing crypto onto users in jurisdictions with tax complications). Multi-rail optionality is a Participant protection.
At least two materially different payout methods shall be offered (e.g. bank wire and crypto). The Firm shall not unilaterally restrict Participant choice without documented prior notice. Time-to-pay shall be tracked per method and disclosable on request.
Time-to-pay disclosure
"Weekly payouts" can mean anything from "request submitted by Monday, paid Wednesday" to "request submitted any time, processed within 30 days". Specific disclosure converts marketing language into measurable commitment.
Time-to-pay shall be disclosed with explicit (a) cut-off day and time, (b) processing day, (c) typical and maximum disbursement timing per method, (d) treatment of weekends and bank holidays. Marketing language ("instant", "fast", "industry-leading") that is not backed by specific commitments is a Conditional Item at minimum.
Payout rejection grounds
Each rejection of a payout request must be tied to a specific clause of the published payout policy and supported by retained evidence. Vague rejection grounds ("rule violation observed") are functionally equivalent to no policy.
Each payout rejection shall (a) cite a specific clause of the published payout policy; (b) be supported by retained evidence accessible during this engagement; (c) be communicated to the Participant with sufficient detail to understand the basis; (d) include the appeal pathway.
Breach behavioural framework
"Behavioural" Breach grounds (gambling, all-or-nothing, reckless trading) are inherently judgement-based. The integrity test is whether the Firm has converted that judgement into observable criteria that can be applied consistently.
Behavioural-Breach criteria observability
A behavioural rule with no observable threshold ("we'll know it when we see it") is functionally equivalent to a discretion-on-demand grant. Observable criteria force the Firm to declare in advance what it considers a Breach.
Each behavioural-Breach ground shall be defined with at least one observable, size-relative threshold — e.g. position size relative to account, position count relative to historical mean, time-of-day concentration, multi-instrument correlation. Subjective grounds without observable criteria shall not be Pass-compliant.
News-event policy clarity
News trading is widely permitted on most Programmes but widely prohibited on others. Ambiguity creates retroactive Breach risk for Participants who unknowingly trade through news.
The Firm's news-event policy shall (a) state whether news trading is permitted; (b) if restricted, define the news source(s) and impact level treated as restricted; (c) define the time window before and after the event; (d) define the consequence (close, ignore, fine).
Cross-account behavioural detection
Where the Firm prohibits cross-account hedging, copy-trading, or coordinated multi-account behaviour, detection logic must operate consistently and the criteria for cross-account linkage must be documented.
Cross-account behaviours shall be detected against documented linkage criteria (KYC matches, IP / device fingerprints, deposit-source linkage, behavioural similarity scores) with retained detection records. Discretionary inference of cross-account coordination without supporting evidence is not Pass-compliant.
Anti-abuse rule scope
Anti-abuse prohibitions exist legitimately to protect the integrity of the Programme. They become a Material Finding when they are scoped so broadly as to capture legitimate trading strategies, used as catch-all grounds against profitable Participants.
Anti-abuse calibration
Anti-abuse rules should target specific exploitative practices (latency arbitrage, tick scalping, multi-account hedging, copy-trading without disclosure, signal-bot dependence). They should not capture legitimate strategies used by professional discretionary traders.
Each Anti-Abuse prohibition shall be (a) named; (b) defined with observable behaviour; (c) supported by a stated rationale linked to programme integrity. News trading, scalping, swing trading, and overnight holding shall be presumed permitted unless explicitly disallowed with documented rationale.
EA / algorithmic-trading scope
Where Expert Advisors (EAs) or algorithmic strategies are permitted, the boundary between permitted and prohibited classes (martingale, grid, latency-sensitive) requires precise definition. Vague EA-policy is a frequent source of dispute.
EA / algorithmic policy shall (a) state whether algorithmic trading is permitted in general; (b) enumerate prohibited classes with definitions; (c) state the consequence of using a prohibited class; (d) describe how the Firm detects prohibited classes.
Anti-abuse enforcement statistics
Even a well-scoped anti-abuse policy can be misapplied. Enforcement statistics — volume of anti-abuse Breaches, distribution across Programme types, profitability of affected Participants — reveal the operating reality.
Anti-abuse Breach statistics shall be available for the trailing 12 months, broken down by anti-abuse ground, Programme, and Participant profitability cohort. Statistical patterns inconsistent with the published rule scope require explanation.
Lifecycle mechanics
Buyback, reset, and scaling mechanics determine the economics of the Participant relationship over time. Their design and disclosure are decisive for whether the Programme operates fairly.
Buyback policy disclosure
Buyback can be a Participant protection (one-shot recovery from a bad week) or a revenue mechanism (pressuring Participants on the verge of completion to pay again). The design and disclosure determine which.
If buyback or reset is offered, the Firm shall publish: (a) cost (absolute or % of account); (b) reinstatement timeline; (c) per-account, per-lifetime, and per-Participant limits; (d) any conditions on availability (e.g. minimum days since breach); (e) treatment of progress on the original account (start fresh, retain progress, partial credit).
Scaling determinism
Scaling rewards consistent Participant performance with larger account size. If trigger conditions are discretionary or unclear, scaling becomes another lever the Firm controls in its own favour.
Scaling triggers shall be deterministic, free of fees not disclosed at purchase, and timely — scaling takes effect within a defined window (typically 5 business days) from satisfaction of the trigger.
Inactivity policy
Inactivity-based account closure is a legitimate housekeeping rule. Where inactivity rules are weaponised — e.g. by counting login as inactivity, or applying inactivity to accounts in dispute — they become a Material Finding.
Inactivity policy shall specify (a) the inactivity period; (b) what counts as activity (typically a trade execution, not a login); (c) the consequence (notification then closure); (d) any exclusions (accounts in dispute, accounts pending payout, KYC-on-hold accounts).
Participant termination grounds and process
Whatever the Programme allows, the Firm retains contractual ability to terminate the Participant relationship. Where this power exists, the grounds and process must be documented to prevent capricious use.
Termination grounds shall be documented; the process shall include written notice to the Participant with the ground cited; outstanding earned payouts shall be honoured (subject to documented exceptions for fraud or sanctions); the appeal pathway shall be available.
Public Report sections
In addition to the universal Public Report sections required by TIB-FRM-1.0 § 6, every PF Public Report shall include:
- Programme inventory — one row per active Programme with headline parameters: profit target, max DD, daily DD, leverage, time limit, payout cadence, terminal split, max account size;
- Rule-parity statement — explicit statement of the parity test outcome under PF-5;
- Behavioural-rule disclosure — whether discretionary behavioural breach grounds are in force, with summary of criteria;
- Anti-abuse scope statement — one-line summary indicating whether legitimate strategies are presumed permitted (PF-18 Pass) or constrained.
Engagement-specific evidence pathway
| Evidence type | Source | Frequency / scope |
|---|---|---|
| Cross-source rule reconciliation | FAQ, programme pages, T&Cs (live captures with timestamps) | Once at evidence phase + jurisdictional variants |
| Server-side parity test | TIB-controlled demo / sandbox account on the firm's production platform | Per Programme, per breach threshold, per side (eval / funded) |
| Payout ledger sample | Firm's payout system extract | Last 12 months, redacted to participant initials |
| Discretionary breach register | Firm's compliance system | Trailing 12 months by ground type |
| Behavioural rule definitions | Firm's published rules + internal interpretation guidance | Current versions + change-log over trailing 12 months |
| Anti-abuse breach distribution | Firm's compliance system | Trailing 12 months, broken down by ground × Programme × Participant cohort |
| Profit-split-ladder application | Firm's account management system | Sample of 30 Participants traced through their lifecycle |
| Programme version archive | Firm's content management system | Three previous versions per Programme |
Limitations
- Where the Firm uses a third-party trading platform (e.g. MetaTrader), TIB observations of server-side parity reflect the configuration as observed at the engagement window; subsequent platform-side changes are out of scope until next re-assessment;
- Behavioural-Breach criteria are inherently judgement-based; TIB assesses whether the criteria are observable and consistently applied, not whether they are wisely set;
- Profit-split economics are not assessed for "fairness" — only for consistency with disclosure and ladder application;
- Where TIB testing occurs in a controlled environment (demo, sandbox), conditions may differ from live trading at peak load; this limitation is recorded in the Methodology Statement of the Public Report.
Module changelog
| Version | Effective | Approved by | Notes |
|---|---|---|---|
| TIB-FRM-PF-1.0 | 16 April 2026 | TIB Standards Committee | Initial publication. 24 binding criteria across 7 themes. Full criterion structure with rationale, requirement, acceptance evidence, illustrative case, and references. |
Normative annex — integral part of this Module.
Module criteria contribute to universal pillar Determinations as follows. The pillar Determination is computed from the conjunction of universal criteria (TIB-IS) and applicable module criteria (PF) per the rules in TIB-FRM-1.0 Annex C.
| Universal pillar | Universal criteria | Module criteria contributing |
|---|---|---|
| TIB-IS.1 Governance | 1.A – 1.E | — |
| TIB-IS.2 Capital & Safeguarding | 2.A – 2.E | — |
| TIB-IS.3 Order Handling & Execution | 3.A – 3.E | PF-5, PF-6, PF-7, PF-8, PF-9, PF-10 |
| TIB-IS.4 Payout Integrity | 4.A – 4.E | PF-11, PF-12, PF-13, PF-14, PF-21, PF-22, PF-24 |
| TIB-IS.5 Risk & Compliance | 5.A – 5.F | PF-17 (cross-account) |
| TIB-IS.6 Disclosure & Conduct | 6.A – 6.E | PF-1, PF-2, PF-3, PF-4, PF-15, PF-16, PF-18, PF-19, PF-20, PF-23 |
Informative annex — explanatory background to module design choices.
The criteria in this module reflect observed practice in the proprietary trading sector during the period 2024-2026. Patterns informing each theme:
- Programme design — cross-source inconsistency observed in 60%+ of sampled firms; particularly common in jurisdictional variants and in programme-tier-specific terms.
- Rule-enforcement parity — deviations between published and server-enforced thresholds observed in <10% of firms tested but always in the firm's favour where present.
- Demo-vs-live — meaningful spread or slippage divergence between evaluation and funded sides observed in a non-trivial minority of firms; often undisclosed.
- Payout integrity — "weekly payouts" advertised without specific cut-off in >50% of firms; specific time-to-pay distributions rarely published.
- Behavioural framework — "gambling" rules without observable thresholds widespread; selective enforcement against profitable Participants periodically alleged.
- Anti-abuse — catch-all anti-abuse clauses present in materially over half of sampled firms; legitimate strategies (news trading, scalping) sometimes prohibited without rationale.
- Lifecycle — buyback used as recurring upsell in some firms; scaling triggers occasionally retroactively altered.
Informative annex.
| Document code | TIB-FRM-PF-1.0 |
| Document type | Controlled Standard — Type-specific Module |
| Issuing authority | TIB Standards Committee |
| Issuing entity | Stratinova LTD trading as Trading Integrity Bureau |
| Approval date | 16 April 2026 |
| Effective date | 16 April 2026 |
| Next scheduled review | 16 April 2027 |
| Distribution | Public — controlled document. Reproduction with attribution. |
| Comment channel | standards@integritybureau.org |
Issuing entity
Stratinova LTD
Cyprus HE475207
Archiepiskopou Makariou III 228, Agios Pavlos Building, 3030 Limassol, Cyprus