Every EU investment firm must classify its clients as retail, professional or eligible counterparty. Private individuals start as retail clients, which gives them the strongest protection. Some brokers invite active traders to "opt up" to professional status, usually to offer higher leverage. Before you accept, understand the trade-off.
The MiFID II tests
To be treated as an elective professional client, you must meet at least two of three criteria (MiFID II, Annex II):
- Activity: you have carried out transactions of significant size on the relevant market at an average of ten per quarter over the previous four quarters.
- Portfolio: the size of your financial-instrument portfolio, including cash deposits, exceeds €500,000.
- Experience: you work or have worked in the financial sector for at least one year in a professional position that requires knowledge of the transactions or services envisaged.
The firm must also carry out a qualitative assessment of your expertise, warn you in writing about the protections you will lose, and you must confirm in writing that you understand. Firms should ask for evidence – statements, payslips, a CV – rather than rely on ticked boxes.
What you gain
- Higher leverage on CFDs – often 100:1 or more on major currency pairs, depending on the broker.
- Sometimes access to products or promotions not available to retail clients.
What you lose
| Protection | Retail | Professional |
|---|---|---|
| ESMA leverage caps | Yes | No |
| 50% margin close-out rule | Yes | Firm's own policy |
| Negative balance protection | Guaranteed by law | Not guaranteed (some brokers offer it voluntarily) |
| Ban on bonuses and incentives | Yes | No |
| Standardised risk warnings and KIDs | Yes | Reduced disclosures |
| Appropriateness test | Required | Firm may assume your knowledge |
| Ombudsman / compensation scheme | Usually eligible | Eligibility can be restricted – check the scheme |
Our view
For almost everyone who asks the question, the answer is to stay retail. The leverage available under ESMA rules is already more than a disciplined trader needs: the margin calculator shows that a €10,000 account can open over €300,000 of EUR/USD exposure at 30:1. The problems professional status "solves" are usually problems of position sizing.
If you genuinely qualify – for example you manage a large portfolio and hedge currency exposure – opt up only with a well-capitalised EU, UK or Swiss firm, confirm in writing whether it still offers negative balance protection, and keep the right to return to retail status in mind.
Frequently asked questions
What are the criteria for professional client status?
Can I go back to retail status?
This guide is general information, not personal financial, tax or legal advice. Rules change; we review this page regularly and show the date of the last update above. Found an error? Tell us. See our editorial policy.
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