Similar to cryptocurrency, CFD and prop trading are largely unregulated, leaving traders vulnerable to unfair treatment by brokers and proprietary trading firms—and, in some cases, even fraud. Canadian company Oxtail Holdings, led by visionary Samuel Katallah, is working to transform the prop trading industry through its new proprietary trading firm, AuraXtail. By leveraging the technological expertise of its fintech division, Aura X, the firm is also introducing a software that will protect market participants from fraud or deceit, even potentially extending its use to exchanges and cryptocurrency.
Audits for Full Transparency
No financial institution in the CFD space has ever agreed to disclose their financial books to the public. This includes brokers. AuraXtail is allowing traders to look into their operations and know exactly what’s going on within their infrastructure. To reinforce its claims of transparency, AuraXtail will be subject to auditing under CPAs and CPAB guidelines. These audits will prove the firm to be sustainable enough to payout traders, verify the proper allocation of evaluation fees, trade execution data, and the overall integrity of financial operations.
Secure Financial Transactions
One of AuraXtails innovative measures is the implementation of escrow services to manage all transactions within the firm. This escrow system acts as the paymaster for evaluation fees, margin account allocations, and payouts. By design, this removes direct control over liquidity from the prop firm, ensuring that funds are used solely for their intended purposes and align with the firm’s public cash flow model that they will voluntarily be forced to disclose with their traders. An introduction of a public cash flow model will put traders at AuraXtail in the loop, where the firm discloses how much of their evaluation fees will go towards the traders live margin.
Addressing Gaps
CEO Samuel Katallah’s experiences in the trading world revealed critical flaws in the modern proprietary trading model. Mismanaged margin accounts, conflicts of interest, and insufficient regulatory oversight were among the issues he had to fight against. Determined to create a better system, he introduced measures at AuraXtail that address these gaps head-on:
- A-BOOK Trading Model: By ensuring that all trades are executed on real markets, AuraXtail eliminates the conflicts of interest inherent in B-BOOK models, where firms manipulate trades and act against them betting / profiting on their losses and misfortune. Many firms falsely claim to operate on an A-BOOK model but fail to prove this with proper regulatory oversight, which is deemed fraudulent. AuraXtail plans to squash this problem by publicly exposing their financials through Canadian auditing firms adhering to the CPAB.
- Escrow: By entrusting a neutral and licensed third party to manage funds, AuraXtail guarantees that liquidity is handled with integrity and goes towards their traders as promised.
- AI-Based Protection Software: To prevent fraud and manipulation, Aura X has developed proprietary AI-based security software. This innovation is planned to not only prevent fraud and manipulation but also will be tasked to power the firm’s broader fintech infrastructure. The protection software will detect any irregularities or misconducts against brokerage firms or traders. Beyond detecting irregularities, Aura X will also power the firm’s escrow integration and broader fintech infrastructure, ensuring a seamless, secure environment for traders and investors. The software is said to also expose any form of fake trading data marketed to traders and investors.
Building Trust Through Regulatory Oversight
To ensure compliance with the highest industry standards, they have laid out their plan of potentially registering their firm with the Alberta Securities Commission (ASC). This registration would provide an additional layer of oversight, reinforcing the firm’s commitment to maintaining the integrity of its operations and safety of traders during their evaluation.
In the event that ASC registration is not finalized, AuraXtail will secure regulatory oversight from an alternative government-approved body.
Standard for the Industry
For other prop firms, the market will become a lot harder to steal with such a model being implemented. This new standard will put AuraXtail in a field of no competitors. For forex traders worldwide on the other hand, AuraXtail will be a secure and reliable platform, built to protect the interests of traders and foster growth in establishing various future professional trading careers.
