Your understanding is incorrect. Futures Prop firms in the United States of America are regulated by the trading exchanges and the NFA/CFTC. In fact, in the United States Futures Prop firms are only allowed to risk the capital of the firm principal(s) - they are not allowed to risk employee trader capital. Furthermore, US futures prop firms are required to pay traders on W-2’s and traders must be registered as employees of the firm! Employee traders are not allowed to deposit their own funds at a futures prop firm. In the United States, if a futures prop firm employee trader loses $1M - it’s the firm’s loss.
Thanks for the explanation Bone, so anybody joining Say TST or alike in theory does not deposit own funds! although by that time they might have paid enough in "Test fees" so at the lowest level it could be construed as their ( traders) money! another thing then some of these business perhaps for the "regulatory" purposes have 2 diff entity 1, that offers "paid test" and 2 that actually funds! Although the actual ownership of the 2 could be same! LOL Having said this in case of TST is there only 1 entity!
I am personally not aware of a legitimate, exchange registered US proprietary futures trading firm that would accept client funds for “training” purposes. Hint: Search the NFA database - it’s interesting.