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The European Securities and Markets Authority (ESMA), in coordination with major national competent authorities (NCAs), has issued a comprehensive regulatory paper targeting the retail proprietary trading industry. The new directive mandates that any entity offering paid "simulated trading challenges" tied to profit-splits must transition into a fully licensed financial service provider within the next 12 months. This effectively closes the legal loophole that allowed prop firms to operate globally as unregulated "tech education platforms" rather than brokers.