What gives the status of a qualified investor and how to get it
Understanding the risks associated with the sphere of investment, the state seeks to restrict private investors’ access to certain financial instruments. For this purpose, a special investor status is used, for which it is necessary to confirm your qualifications and special knowledge. Ot removes restrictions and opens access to extended financial transactions. Before obtaining the status of a qualified investor, it is necessary to study the conditions of a particular broker.
Advantages of obtaining the status
By imposing restrictions on access to the currency and securities markets, the state seeks to protect, first of all, the savings of private inexperienced investors. Therefore, obtaining the status of a qualified investor opens up new opportunities for this category, in particular, access to:
- closed-end mutual funds, venture and ETF funds;
- foreign exchanges;
- shares and units of foreign companies;
- highly liquid, and therefore high-risk securities (stocks, bonds);
- participation in the IPO.
In other words, an investor, whether an individual or a company, gets the right to use financial instruments for investment that are as profitable as they are risky. It is believed that a qualified investor is aware of what he is doing, in what and to what extent he is invested, that is, he is a professional in the field of finance.
Conditions for obtaining the status
Both organizations and individuals can have such a status. The list of the first ones includes the Central Bank, Deposit Insurance Agency, insurance companies, banks, NPFs, investment funds, traders, dealers, brokers and others, including legal entities not included in the legally established list, if they meet the requirements of the financial regulator.
The second category includes individuals who meet any of the following requirements:
- owning investment assets of the required volume. For example, BCS and Sberbank give the status of a qualified investor if the size of the investor’s assets, which includes securities, money on accounts and deposits, including those transferred to trust management, is at least 6 million rubles;
- having property of a certain value;
- who have already made transactions at least 10 times a quarter for the amount established by law;
- previously worked with financial instruments for at least 2 years, professionally engaged in investing, or 3 years in an organization whose activity consists in working with securities and other investment instruments;
- those who have a diploma of higher economic education or a qualification certificate.
Thus, this status, like highly liquid assets, is not available to everyone. A private investor should at least be well versed in the financial sphere, and at most have a fairly large capital.
How to get the status
To get the status, the initiator must pass the test. The latter may be carried out by forex dealers, brokers, CC and other persons authorized to assign the status and form registers. For example, you may need to obtain the status of a qualified investor when working with Freedom Finance, Tinkoff, VTB, Sberbank, BCS, Alfa. It must be said that each such person maintains its own register of qualified investors and applies the status assignment regulations defined by it. Simply put, an investor must pass a kind of exam. Upon successful completion of the test, the applicant receives the appropriate status, and his name is entered in the register.
This procedure is declarative in nature, therefore, it is initially necessary to submit an application and attach to it documents confirming the right to receive the status (proving compliance with one of the above requirements).
What assets can a qualified investor use
As mentioned above, the most profitable, but at the same time the most risky financial instruments become available to a qualified investor. These include:
- Units of closed-end funds, for example, hedge, credit, venture, private equity.
- Combined investment products, for example, securities, deposits, derivatives, etc. In addition to the fact that the seller of such a product determines the set himself, he also sets a condition under which the investor is paid a profit.
- Eurobonds are the same as bonds, only issued in foreign currency.
- Depository receipts, which are certificates confirming the right to bonds and shares.
- IPO is an opportunity to acquire shares of companies during their initial placement on the stock market.
In conclusion, we add that an unqualified private investor will have access to a limited set of financial instruments before being assigned the status, which, as a rule, do not bring much profit, but also do not threaten significant losses.
Published: 25 April, 2022