Becoming a Professional Investor in Hong Kong
Background:
A Professional Investor (“PI”) is a high-net-worth investor who is considered to have a depth of experience and market knowledge that makes them eligible for certain benefits.
As per the Securities and Futures Ordinance (“SFO”), a PI includes entities and individual investors holding over HK$40 million in assets or an HK$8 million portfolio value, respectively.
Which products are available to Professional Investors?
We are continually expanding the selection of investments available to clients and periodically adding new products and services that are only available to Professional Investors;
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Specified Bonds (All Professional Investors)
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ChiNext, Star (Institutional Professional Investors only)
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Cryptocurrency
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Crypto related products
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Derivative funds* (Institutional Professional Investors only)
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FX Swaps
*Funds defined as derivatives by their product issuer, can only be traded by Institutional Professional Investors as per the Securities and Futures Commission (“SFC”)
How do I qualify as a Professional Investor in Hong Kong?
Professional Investors are considered as having sufficient capital, experience and a net worth that lets them engage in more advanced types of investment opportunities, without the need to liquidate investment assets in the short term and can experience a loss of their investment, without damaging their overall net worth.
To qualify as a Professional Investor, you must meet or exceed prescribed financial thresholds, which vary by client category:
| Client Category | Financial Threshold / Requirement |
|---|---|
| Institutional | Entity or financial institution authorized under the insurance ordinance or regulated under Hong Kong or non HK Law. |
| Individual | A High Net Worth Individual in possession of cash and/or securities or have a portfolio held by a custodian of not less than HK$8 million (or its foreign currency equivalent). |
| Joint* | A High Net Worth Individual, with either his or her spouse or children in a joint account, in possession of cash and/or securities or have a portfolio held by a custodian of not less than HK$8 million (or its foreign currency equivalent). |
| Corporation/ Partnership | A corporation or partnership in possession of cash and/or securities or have a portfolio held by a custodian of not less than HK$8 million (or its foreign currency equivalent) or total assets of not less than HK$40 million (or its foreign currency equivalent). |
| Trust Corporations | A trust corporation that has been entrusted under the trust(s) of which it acts as trustee with total assets of not less than HK$40 million (or its foreign currency equivalent). Please note that all trustees, if more than one, must qualify as Professional Investors in order for the trust to qualify. |
*If you are a joint account holder, you must represent and warrant to Interactive Brokers Hong Kong (IBHK), that you and the other account holder are married or parent/ child and that there is no written agreement between you and the other account holder which governs the sharing of your joint portfolio. If you and the other account holder are not married or parent/child, or if an agreement exists which governs the sharing of your joint portfolio, both account holders will be required to provide proof they meet the Financial Threshold for the account to be treated as a PI.
What are the risks of becoming a Professional Investor?
Professional Investors are not afforded some of the protections given to general retail investors. In particular, IBHK is not required to fulfill certain requirements under the Code of Conduct and other Hong Kong regulations when providing services to Professional Investors. These include, but aren’t limited to, rules restricting or prohibiting the issuance of advertisements, the making of unsolicited calls and the communication of an offer in relation to securities.
How can I opt in as a Professional Investors?
IBKR clients can update their Professional Investor status from Account Settings in Portal by providing their consent and accepting the level of risk involved from complex Products. The PI status will be automatically approved if the client’s equity holdings in their IBKR account(s) exceed the PI prescribed financial threshold. Clients holding a portfolio value below the required financial threshold will be requested to either (i) provide documentation proving their Net Worth or (ii) make a deposit to increase their IBKR holdings.
Institutional professional Investors (“IPI”), as described under the SFO regulation, are automatically assigned the PI regulatory status. Any sub-account of an IPI master that is configured to limit the master to trading the account on the client’s behalf will inherit the IPI master’s regulatory status. Clients with one or more self-traded accounts at IBKR need to opt in manually to be classified as Professional Investor.
IBHK recommends that prospective Professional Investors obtain independent professional advice, if deemed necessary, in relation to the consequences of being treated as a professional investor (including those set forth in the SFO and the Code of Conduct).
Professional Investor status is subject to IBHK’s validation of your assets. Investing in financial products and services is subject to IBHK’s eligibility and suitability criteria.
Is my Professional Investor Status Permanent?
To retain the Professional Investor status, clients must provide proof they continue to meet the eligibility requirements every 12 months.
Clients holding an IBKR portfolio meeting the prescribed financial threshold, will have their PI status automatically renewed prior to the expiry date, a notification will be sent to alert them to the renewal. Clients who do not wish to be renewed can opt out at any time via Account Settings in Portal.
Clients holding an IBKR portfolio below the prescribed financial threshold, will need to provide proof of financial holdings to retain theirs PI status. A notification will be sent to the clients two months from the expiry date, alerting them of the pending PI Proof task visible in Portal under the account’s Pending Tasks. Clients can either make a deposit to increase their IBKR holdings to meet the PI eligibility threshold or submit documentation to prove their financial holdings outside of IBKR, meet the financial thresholds.
Clients failing to provide proof they continue to meet the financial eligibility threshold prior to their PI Status expiry date, will cease to be classified as a Professional Investor, resulting in their PI dependent trading permissions removed, preventing any new positions being opened. Clients will still be able to hold reduce or close any of their existing Position(s).
IPI client’s regulatory status will remain in place so long as the client continues to maintain a valid regulator license. IBKR reserves the right to remove the IPI status of a client as and when it deems necessary. Once removed, PI status for subaccounts configured to limit the master to trade on their behalf will be withdrawn along with any PI related trading permissions.
How can I opt out of being classified as Professional Investors?
Professional Investors have the flexibility to withdraw their consent at any point in time by changing their PI classification to “Non Professional Investor” via the Account Settings in Portal. Once changed, PI related trading permissions will be immediately removed and existing open positions will be set to “Closing- Only”. Downgraded accounts may continue to hold or close existing position of these PI exclusive products but cannot expand or open new positions.