A qualified institutional buyer (QIB) is an investor that by virtue of being a sophisticated investor, does not require the regulatory protection that the Securities Act's registration provisions typically provides to retail investors. QIBs are often major institutions such as banks, registered broker-dealers, insurance companies, investment companies, or pension funds that manage a minimum investment of $100 million in securities on a discretionary basis. Furthermore, QIBs are expected to have sufficient market knowledge or expertise that enables them to make well-informed decisions when investing in securities. In particular, a QIB must have the financial capability and expertise to evaluate the financial risks and merits of investing in the particular security.

The SEC has amended the QIB and accredited investor definitions to give a wider range of entities opportunity to qualify as qualified institutional buyers. For instance, the definition now includes family offices with at least $5 million in assets under management, limited liability companies (LLCs) with investments in excess of $5 million, registered investment advisors, and tribal governments with assets over $5 million as eligible investors. Moreover, the amendments also expand the list of persons or entities that may purchase restricted and control securities under Rule 144A, which provides additional liquidity for private securities by permitting them to traded in the secondary market and increasing their availability to QIBs.

In addition, the SEC has widened the definition of a QIB to include certain institutional accounts that meet specified asset and management requirements regardless of their status as clients of registered broker-dealers. These investors must still meet the relevant criteria to be considered a QIB, and they may be limited as to how much they can purchase of certain kinds of securities.

The new rules to who can qualify as QIBs have tightened the definition, but also open up the market to new entities accessing these investments. With the increased liquidity, QIBs can access many more securities that are not registered with the SEC, thus providing more flexibility for both the acquirer and the issuer. The new amendments also help to ensure that QIB investors are truly sophisticated and knowledgeable investors, which is beneficial to all parties involved and the integrity of the financial markets.