Qualified Eligible Participant (QEP)

Written by:
Image
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades.

Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

View all posts
Updated January 16, 2021

What is a Qualified Eligible Participant (QEP)?

A qualified eligible participant (QEP) is a person who is allowed to trade in investment funds as defined in Rule 4.7 of the Commodity Exchange Act.

How Does a Qualified Eligible Participant (QEP) Work?

In order to be a QEP, a person must own at least $2,000,000 of securities and other investments, have an open account with a futures commission merchant for at least six months, have at least $200,000 of initial margin and option premiums for commodity interest transactions and have a portfolio of those investments.

QEPs are similar to, but not the same as, accredited investors. That is, they are considered sophisticated investors who understand the nature and risks of commodities trading and hedge funds. Accordingly, when funds allow only QEPs to be investors, they are involving only people who more fully understand the nature and risks of the investment. This provides an exemption from certain regulations for the hedge fund.

Why Does a Qualified Eligible Participant (QEP) Matter?

The Commodity Exchange Act of 1936 requires hedge fund managers to register as commodity pool operators (CPO) if their funds trade any commodity futures, contracts, or options. CPOs must comply with the Act’s disclosure requirements as well as those of the Commodity Futures Trading Commission (CFTC). If a hedge fund limits its investors only to qualified eligible participants (QEPs), the hedge fund may be able to obtain an exemption from several regulations the Commodity Exchange Act would impose.

Ask an Expert about Qualified Eligible Participant (QEP)
At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Qualified Eligible Participant (QEP).
Be the first to ask a question

If you have a question about Qualified Eligible Participant (QEP), then please ask Paul.

Ask a question

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Qualified Eligible Participant (QEP), then please ask Paul.

Ask a question Read more from Paul

Read this next

Paul Tracy - profile
Ask an Expert about Qualified Eligible Participant (QEP)

By submitting this form you agree with our Privacy Policy

Share
close
Don't Know a Financial Term?
Search our library of 4,000+ terms