Would security futures products be eligible OTC derivative instruments as defined in Exchange Act Rule 3b-13?
A37: No. Exchange Act Rule 3b-13(b)(2)(i) defines an eligible OTC derivative instrument, and specifically excludes from the definition of eligible OTC derivative instrument a security that is listed or traded on a securities exchange. Security futures products are exchange listed instruments.87 Because a security futures product is a security that is listed on a registered national securities exchange, it is excluded from the definition of an eligible OTC derivative instrument.88 Accordingly, an OTC derivatives dealer that wishes to engage in activities involving security futures products would be limited to those activities permissible in securities that are not eligible OTC derivative instruments – activities such as ancillary portfolio management securities activities.89 b. Addressing Conflicts Associated with Proprietary Trading and Trading for Discretionary Accounts by Exchange Members: Exchange Act Section 11(a) Section 11(a) of the Exchange Act90 prohibits a member of a national
