Professional investor
Also called Per se professional investor, Elective professional investor
A professional investor is an investor who, under EU and EEA rules, is treated as having the experience, knowledge and expertise to make its own investment decisions and assess the risks involved, and who therefore receives fewer regulatory protections than a retail investor.
The category splits in two. Per se professional investors qualify automatically, and include regulated financial entities and large undertakings that meet two of three size tests on balance sheet total, net turnover and own funds. Everyone else must go through an elective opt-up.
The elective opt-up combines a qualitative assessment by the firm with two of three quantitative tests: a significant frequency of transactions over the preceding four quarters, a financial instrument portfolio above a set threshold, and at least a year of relevant professional experience in the financial sector.
Neighbouring jurisdictions use different words for a similar idea. The United Kingdom uses certified high net worth and sophisticated investor categories with their own thresholds and a twelve-month validity on self-certification statements. The UAE uses professional investor by nature or by assessment, with a net assets test. The tests are not interchangeable, and an investor who qualifies in one may not qualify in another.
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