Who is a qualified investor

статус квалифицированного инвестора

I think every broker, getting a little bit serious trading experience (successful or not — does not matter), think about how to start trading in foreign markets. For comparison, in the US the number traded on the stock exchange of securities in dozens of times more than on the stock exchanges of Moscow and St. Petersburg, not to mention derivatives. That’s just an outlet for domestic investors is very limited (partly the topic has been discussed here).

There are three ways of entering foreign markets for a broker:

  • trade through a Russian broker. The main disadvantage — limited access to the papers. For full access the desired status of qualified investor is needed;

  • work through the sub-broker, that is, through an offshore company associated with the American broker. A lot of cons — no right to dividends, the risk due to long chains, large commission;

  • trade directly with an American broker. One minus: only few American brokers agree to work with Russia (FATCA law).

The easiest way and least costly — work with national brokers (BCS, freedom Finance, Finam, etc.). But it all boils down to one issue: obtaining the status of qualified investor.

  • Important: since most Russian brokers, operating through its subsidiary in the United States are tax agents, the trader does not need to solve the issues of taxation. If working with US brokers, the issues of double taxation and the submission of the declaration are on the conscience of the trader.

How to obtain the status of qualified investor

The domestic brokers offer a minimum entry threshold (from 500-1000 dollars — for the other two variants the entry threshold from 5-20 thousand dollars), minimum package of documents and other pleasant additions.

The status of qualified investor (the indication of Central Bank No. 3629-from 29.04.2015) is available to traders that meet any of the following requirements:

  • Total assets (instruments, securities, derivatives), including transferred in trust must be equal to at least 6 million rubles;

  • experience of transactions with securities not less than 3 years;

  • the number of completed securities and derivatives transactions in the amount of 6 million rubles for the last 4 quarters at least 1 time per month (at least 10-12 times in the 4th quarter);

  • the size of the property of the trader — at least 6 million rubles;

  • the trader has higher economic education and one of the certificates: CIIA, FRM, CFA.

Above requirements are for individuals, status as a qualified investor may be assigned to legal entities as well, but the requirements to the sum of capital — 200 million rubles. In theory, to obtain the status of a qualified investor you should have a proper education with supporting certificate and experience of securities trading. In practice, without the promised 6 million, the account may open only 1-2 company (previously only “Finam” could open).

Summary. Of course for the domestic traders to attract customers it is beneficial to focus on a low barrier of entry (not a low deposit but a low minimum transaction!) the simplicity of taxation, clear rules etc. But the minimum deposit of 6 million rubles (85-90 thousand dollars) dramatically upset traders. Status as a qualified investor opens access to the American market (with no status a little more than 60 American papers are only available).

And one more thing. Yes, when working on two other schemes, the trader pays more commissions, working with a large amount of a lot, but his deposit is protected by U.S. insurance companies. In Russia, there is no insurance against bankruptcy of the broker. In other words, when opening deposit of 6 million rubles, a trader can hold hundreds of deals due to low entry threshold, but risks losing everything. Entering the American market directly, the trader doesn’t risk a deposit, but 6 million rubles will be enough for a maximum of 10-15 transactions.

There is a third option: send the money to a manager in trust, which works through a broker in Russia — the investment amount is small, the essence of trade is similar, but risks are increasing.

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