Qualified Eligible Person
A "Qualified Eligible Person" is, as defined by the Commodity Futures Trading Commission, is an individual who has fulfilled the eligibility requirements for dealing in certain alternative investments such as futures, hedge funds, or commodity pools. In general, to be considered a QEP, the person must either meet a "portfolio requirement" (i.e., meet or exceed a threshold value of portfolio holdings) or be employed in a certain professional capacity within the alternative investment sector.
To be considered a QEP, the following persons must fulfill the portfolio requirement:
- Registered investment companies, banks, and insurance companies;
- Certain state, benefits, corporations, trusts and partnerships with over $5 million in assets;
- Private business development companies; and
- 501(c)(3) organizations with more than $5 million in assets.
In order to meet the portfolio requirement for becoming a QEP, an individual must:
- own at least $2 million in investable securities;
- have had on deposit with futures commission merchant at least $200,000 in margin and/or option premiums; or
- have some combination of the two.
Financial Professionals NOT Subject to Portfolio Requirement
Below is a list of investors who are considered QEPs regardless of whether a portfolio requirement has been met:
- Registered brokers, dealers, futures commission merchants (FCMs);
- Registered commodity pool operators (CPOs), commodity trading advisors (CTAs), and certain affiliated associated persons and knowledgeable employees;
- SEC registered investment advisers (some restrictions apply);
- an investment entity such as a hedge fund where all owners are QEPs; and
- a "qualified purchaser," a high net worth individual as defined by the Investment Company Act of 1940
- Electronic Code of Federal Regulations. U.S. Government Printing Office.
- Qualified Eligible Person (QEP) Definition. Hedge Fund Law Blog.