Professional Trading Accounts

Professional trading accounts offer higher leverage with fewer regulatory protections for eligible investors. This guide explains how to become an elective professional client, in line with FCA requirements. Our traders have also listed the best pro trading accounts in the UK:

What Is A Professional Trading Account?

A professional trading account is offered to investors who meet certain requirements, including experience in the finance sector, a minimum portfolio size, and the placement of large trades in the last 12 months. 

These profiles provide several advantages over standard trading accounts, from higher leverage and lower margin rates to competitive fees, dedicated account managers and support for out-of-hours trade execution.

However, a professional trading setup often lacks various protection measures, with no negative balance protection, limited money segregation requirements, and a greater assumption that clients will understand the risks associated with certain trading products.

Ultimately, professional trading accounts are only suitable for individuals with previous or current experience in financial services.

How To Get A Professional Trading Account

In the UK, the requirements for the professional trader designation are set by the Financial Conduct Authority (FCA).

Elective Professional Status

The elective professional trader status is obtained based on previous experience and available capital rather than formal trading certifications.

The FCA requires brokers to ensure elective professional clients meet at least two of the following definitions:

• Has placed 40 trades of significant size within the last year on relevant markets – ideally at an average frequency of 10 per quarter over the previous four quarters.
• Has a total cash and financial instruments portfolio of £500,000 or more – excluding company pensions, property and other non-financial investments.
• Has worked or currently works in the financial sector in a professional trading or associated role – with specific knowledge of the type of instruments available on the trading account.

Make An Application

If these conditions are met, you must put in writing your request to be treated as a professional client, giving evidence that the minimum requirements are met and stating your intentions to trade on specific markets, such as commodities or forex.

If this is satisfactory, the firm will reply to your written request with a full breakdown of the professional trading setup. The FCA requires this to include “a clear written warning of the protections and investor compensation rights the client may lose”.

The next correspondence from your side must be an acknowledgement of the implications and risks of losing such protections.

Open An Account

Once the legal and regulatory formalities are complete, finish any further verification and deposit funds into the account.

At this stage, a personal account manager may become involved, guiding you through the remainder of the process and helping you navigate your new broker.

Institutional Professional Status

Another way to gain a professional trading setup is to trade on behalf of a regulated or authorised entity. Qualifying companies include:

• Pension funds
• Local authorities
• Investment firms
• Insurance companies
• Commodity derivatives dealers

Hedge funds that meet capital requirements can also qualify as professional clients, as can local and regional banks.

This list is not exhaustive, and several other types of financial institutions meet the FCA criteria for per se professional clients.

Advantages Of Pro Trading Accounts

• Higher Leverage – The FCA caps the leverage available to regular traders at 1:30. However, professional clients can access higher leverage of up to 1:500.
• Exclusive Markets – Some markets, such as swaps or complex derivatives, may only be accessible to professional investors through select brokerages. Moreover, brokers that offer professional trading accounts may take bespoke trading requests on behalf of professional or institutional clients.
• Rebates & Lower Fees – One way brokers try to entice professional traders and their significant capital to their platforms is through lower fees and rebates. Some pro trading brokers may even offer zero fees for maker transactions.
• Bespoke Support – Many brokers offer personal account managers to help professional traders manage their profiles. These dedicated support staff are more knowledgeable and available than traditional customer service representatives and often proactively monitor accounts or pass on bespoke trades to a dealing desk.

Disadvantages Of Pro Trading Accounts

• Stringent Eligibility Criteria – Pro trading accounts are limited to those working on behalf of institutions or working in relevant jobs in the financial sector. There is no formal trading certification that allows investors to qualify for this type of account. In addition, there are significant capital requirements.
• Lack Of Protection – Several protections available to retail investors, such as negative balance protection and automatic stop-outs are not provided to professional clients. This makes trading with a professional account riskier.

How To Compare Brokers With Professional Trading Accounts

Instruments & Markets

Ensure that the brokerage offers the specific markets and instruments that you wish to trade, or has the ability to execute bespoke trades if that is a facility you require.

Note, specialised brokers may require prospective clients to have specific experience in their market to register for a pro trading account.

Trading Platforms

Professional traders may need multi-asset platforms with complex analysis tools, sophisticated order types, and support for deep market data.

Check if the broker supports your preferred platform, or offers API access so you can use your own trading programs and algorithms.

Leverage & Margin

In addition to offering high leverage, the best brokers with professional trading accounts offer low margin rates on products like CFDs and spread betting.

Pepperstone Professional Trader Leverage

Fees & Commissions

Professional traders may need to shop around to find the lowest fees and commissions. With high-volume and high-capital trades, finding the best deal can have a significant impact on profits. Some brokers also offer fee rebates.

Alternatively, see our list of professional trading accounts with competitive fees.

Further Considerations

Professional Trader Tax

Investors may want to consult with a qualified tax professional. Activity in a professional trading account may be classified as self-employed or business income.

This means that professional trader tax may be in line with regular income tax rather than speculative or capital gains tax.

Extended Hours

Professional traders may have access to after trading hours, depending on the broker and the market being traded.

This can provide additional opportunities for profits, but it also carries additional risks, such as increased volatility and lower liquidity.

Bottom Line On Professional Trading Accounts

While the hurdles to qualifying for a professional trading account in the UK are significant, benefits such as lower fees, higher leverage and extended trading hours are attractive. This said, professional trader status is not all positive, as investors may lose protections such as negative balance protection and automated stop-out levels.

See our ranking of the best pro trading accounts to find a suitable provider.

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