What is a qualified Participant – QEP’
Qualified bidder, or QEP, is a natural person who meets the requirements for trading in complex investment funds such as futures and hedge funds. The rules for determining the QEP are provided in accordance with rule 4.7 of the Law on commodity exchanges.
Breaking down the ‘qualified right – QEP’
Qualified participants (QEPs) must meet a number of conditions described in the Law on commodity exchanges. They must possess not less than 2 million dollars in securities and other investments and at least $200,000 in initial margin and premiums on option’s percent of transactions in commodities. In addition, they must have an open account with the fcm at any time within the previous six months. Finally, they must have a common portfolio investments listed in the above requirements.
QEPs are considered more knowledgeable than the typical investor in relation to a complex investment. Hedge funds, for example, are considered riskier than mutual funds, pension funds and other investment vehicles. They can see significant losses, but to produce a higher than average long-term return in case of success. Managers of hedge funds by assets predict they will do in the future, while a decrease in assets, they predict, will fall in price.
By law, many participants in the hedge Fund must be QEPs. Hedge funds that limit their investors only QEPs can obtain exemption from some securities and regulations of the Commission. This exemption allows hedge Fund managers greater freedom in making investment decisions, which opens the door for more significant risks and benefits than other types of investments. Hedge funds consider contributing to the financial crisis of 2007-2008 by adding risky, to use a derivatives-based banking system. These investments have created high returns when the market was good, but increases the impact of the downturn in the market.
QEPs compared to accredited investors and operators commodity pool
Qualified participants who meet requirements similar to accredited investors that they must meet certain income and net requirements. The difference is that QEPs are assumed to have a deep understanding of the complexities of trading risky assets, such as futures and hedge funds.
Individuals who receive funds for use in a commodity pool, such as a hedge Fund must register as commodity Pool operators (SROs). The NSP must comply with the requirements on information disclosure as the law on commodity exchanges and the Commission on trade in commodity futures. While investors in hedge funds must be QEPs, hedge Fund managers should be as QEPs and NSP.