In plain English
What Professional client means
Professional clients are treated as more knowledgeable or experienced than retail clients. That usually means they receive fewer conduct protections and may have access to products or execution terms not offered to retail clients. Some entities qualify automatically; some individuals may qualify only if they meet strict tests.
Why it matters
Client classification can change the level of disclosure, appropriateness checks, and product access. In leveraged products, the difference between retail and professional status can materially affect protections and eligibility. It also affects how a firm documents its relationship with the client.
Example
A large bank or regulated asset manager is generally treated as a professional client for MiFID-style services. An experienced individual may also request professional status if the firm’s criteria are met and the firm agrees. Simplified example: that client may then be offered a different set of services or terms.
Quick answers
Common questions
Does professional client status remove all protections?+
No. It usually reduces some conduct protections, but firms still have regulatory obligations and must act within the applicable rules.
Can an individual be a professional client?+
Yes, in some regimes. An individual may qualify by meeting tests for experience, trading frequency, portfolio size, or related professional expertise.
Sources