How to become a Professional Investor?
At times we often asked the question "how can I be treated like a Professional Investor"? More often than not, the goal is to get a higher leverage on your trading account.
What does it mean when an investor is classified as a Professional Investor?
In simple terms, this basically indicates that the investor has enough and sufficient experience, knowledge and skills to make their own investment decisions and correctly assess the risks they incur.
What should the broker do before they consider me as a Professional Investor?
The intermediary is obliged to very the experience and knowledge of the client, as well as obtain reasonable assurances that the client is able to autonomously make his/her own investment decisions.
How can I show my broker that I am a Professional Client?
You must demonstrate that you meet at least two of the following criteria:
1) Having traded/invested, in significant volume, on the same market / product, at least 10 operations per quarter in the last year;
2) Having a portfolio (cash + securities), equal to at least €500,000.
3) Work or have worked in the financial sector for at least one year in a professional position requiring knowledge of the transactions or services provided.
- the customer must declare in writing to the broker that he / she wishes to be treated as a professional client, in general or in relation to a particular service or transaction or product;
- the Broker must give these Clients a clear written warning of the protections and rights that the Professional Client loses (as opposed being a retail client);
- Customers must declare in writing in a document separate from the contract that they are aware of the consequences of the loss of these protections.
Warning: The Professional client is obliged to inform the broker of any future changes that may affect his categorization. The European regulators designed these rules to protect the investor. Do not lie or overestimate your knowledge when providing the information to your broker! The broker or bank is obliged to request documentary evidence of your statements.