Qualified Eligible Participant (QEP)
Candlefocus EditorFirst and foremost, a QEP must own at least $2,000,000 of investments and securities. This includes stocks, bonds, mutual funds, and other investments. This requirement seeks to ensure that only individuals with a certain level of financial sophistication and knowledge can make these types of investments. In addition, a QEP must have an open account with a FCM (Futures Commission Merchant) for a minimum of six months. This requirement also seeks to ensure that a QEP has sufficient experience in trading and investing to understand the risks and rewards of the investments they are undertaking.
Finally, a QEP must have a portfolio with at least $200,000 of initial margin and option premiums for commodity interest transactions. This requirement is in place to ensure the individual has sufficient capital to cover any potential losses that could arise from trading in risky assets.
Overall, QEPs are similar to accredited investors in that they are assumed to have a sophisticated understanding of the complexities of trading risky assets such as futures and hedge funds. However, there are distinct differences between QEPs and accredited investors as well; for example, accredited investors have a low net worth and income threshold, while QEPs have much more stringent requirements for qualification. Ultimately, it is important to remember that both QEPs and accredited investors represent a certain level of sophistication and knowledge when it comes to trading risky investments, and they should be held to similar levels of accountability when it comes to their investments.