What Is a Qualified Institutional Buyer (QIB)? Definition and Examples

The SEC defines the term in Rule 144A, adopted on April 23, 1990. The rule gives a list of types of firm plus a size test. Only firms and funds are on the list. A person, however rich, is not.

“On a discretionary basis” means the firm itself decides what to buy. Unaffiliated issuers are companies that the firm does not control and that do not control it. A buyer may act for itself or for other QIBs. When it buys for clients, those clients must be QIBs too.

In finance, QIB status is a ticket to the Rule 144A market. Companies sell new bonds or shares to banks in a private deal. The banks then resell them to QIBs. Rule 144A lets those resales skip SEC registration. The steps are in our guide to Rule 144A.

The market is large. In 2024, companies raised about $1T through Rule 144A and Regulation S deals, the SEC staff says. Regulation S covers sales made outside the US. For 2012, the SEC put Rule 144A deals by operating companies at $636B, leaving out asset-backed debt.

How the $100 Million Is Counted

• Securities onlyBank deposit notes, certificates of deposit, loan participations, repurchase agreements and swaps do not count.
• Cost or market valueHoldings count at cost, unless the institution reports them at market value in its accounts.
• SubsidiariesSecurities held by subsidiaries that are consolidated in the accounts count toward the total.
• Unaffiliated issuersSecurities of the institution’s own parent or subsidiaries do not count.

A QIB certification is a signed note that a buyer meets the test. Rule 144A sets up no SEC register or certificate. Instead, the seller must reasonably believe the buyer is a QIB. The rule lists four ways to back that belief.

1. 01
   Financial statementsThe buyer’s most recent public financial statements.
2. 02
   Public filingsRecent information the buyer has filed with the SEC or another regulator.
3. 03
   A securities manualRecent information in a recognized securities manual.
4. 04
   An officer’s certificateA statement by the chief financial officer, or a person in an equivalent role, giving the amount of securities the buyer owns and invests.

The fourth way is what most people mean by a QIB certificate. The data must be fresh. For a US buyer, it must be dated within 16 months before the sale. For a foreign buyer, the limit is 18 months. The list is open, so a seller can use other sound proof.

A QIB investor and an accredited investor both get access to unregistered securities. The tests differ in size and in who can pass.

The gap between the two tests is wide. A family office with $60M of investments can be accredited, but it falls short of the QIB test. Other investor categories, such as qualified purchasers, are covered in our guide to the qualified investor.

Four buyers want a piece of a $500M bond deal sold under Rule 144A. The buyers and their figures are illustrative.

The bank fails on net worth alone. Its holdings clear $100M, but a bank also needs $25M of audited net worth. The family office would need $40M more. The dealer passes because dealers face a $10M bar.

As a person, you cannot be a QIB. You can still hold QIB-only deals through a mutual fund, a pension plan or an insurer that buys them. For shares in a private company, your routes are private placements under Regulation D and, for smaller companies, public offerings under Regulation A+.

QIB status also shapes how private shares change hands. A holder of restricted shares can sell them to a QIB under Rule 144A if the rule’s conditions are met, and the rule sets no holding period. That gives large institutions an easier path into secondaries than smaller buyers have.

Common Mistakes

• Equating wealth with QIB statusNo individual qualifies, whatever their net worth.
• Counting assets under managementThe test counts securities the institution owns and invests at its discretion. Deposits, loans and swaps are left out.
• Forgetting the bank net worth testA bank needs $25M of audited net worth on top of the $100M.
• Using stale numbersInformation older than 16 months, or 18 months for a foreign buyer, falls outside the listed methods.
• Treating QIB and accredited as the sameThe QIB bar is set for large institutions. Accredited status opens Regulation D deals only.

Qualified institutional buyer (QIB)

An institution that owns and invests at least $100M in securities of unaffiliated issuers, or meets another Rule 144A test.

Rule 144A

The SEC rule that allows resales of unregistered securities to QIBs.

Accredited investor

A person or entity that passes the SEC’s income, wealth or license tests under Rule 501(a).

Unaffiliated issuers

Companies that the institution does not control and that do not control it.

Discretionary basis

Investing where the institution itself decides what to buy and sell.

Registered dealer

A securities firm registered with the SEC to trade for its own account.

Riskless principal trade

A dealer buys a security and at the same time sells it to its customer.

Regulation S

The SEC safe harbor for offers and sales made outside the US.

Figures were last checked on October 21, 2026. The rules are United States federal rules. Check the current rule text before you act.