181
‘‘(i) RULEMAKING TO EXTEND REQUIREMENTS TO
NEW BANKING PRODUCTS.—
‘‘(1)
LIMITATION.—The
Commission
shall
not—
‘‘(A) require a bank to register as a broker
or dealer under this section because the bank
engages in any transaction in, or buys or sells,
a new banking product; or
‘‘(B) bring an action against a bank for a
failure to comply with a requirement described
in subparagraph (A);
unless the Commission has imposed such require-
ment by rule or regulation issued in accordance with
this section.
‘‘(2) CRITERIA FOR RULEMAKING.—The Com-
mission shall not impose a requirement under para-
graph (1) of this subsection with respect to any new
banking product unless the Commission determines
that—
‘‘(A) the new banking product is a secu-
rity; and
‘‘(B) imposing such requirement is nec-
essary or appropriate in the public interest and
for the protection of investors, consistent with
the requirements of section 3(f).
182
‘‘(3) NEW BANKING PRODUCT.—For purposes
of this subsection, the term ‘new banking product’
means a product that—
‘‘(A) was not subjected to regulation by
the Commission as a security prior to the date
of enactment of this subsection; and
‘‘(B) is not a traditional banking product,
as such term is defined in section 206(a) of the
Financial Services Act of 1998.
‘‘(4) CONSULTATION.—In promulgating rules
under this subsection, the Commission shall consult
with and consider the views of the appropriate regu-
latory agencies concerning the proposed rule and the
impact on the banking industry.’’.
SEC. 207. DERIVATIVE INSTRUMENT AND QUALIFIED IN-
VESTOR DEFINED.
Section 3(a) of the Securities Exchange Act of 1934
is amended by adding at the end the following new para-
graphs:
‘‘(54) DERIVATIVE INSTRUMENT.—
‘‘(A) DEFINITION.—The term ‘derivative
instrument’ means any individually negotiated
contract, agreement, warrant, note, or option
that is based, in whole or in part, on the value
of, any interest in, or any quantitative measure
183
or the occurrence of any event relating to, one
or more commodities, securities, currencies, in-
terest or other rates, indices, or other assets,
but does not include a traditional banking prod-
uct, as defined in section 206(a) of the Finan-
cial Services Act of 1998.
‘‘(B) CLASSIFICATION LIMITED.— Classi-
fication of a particular contract as a derivative
instrument pursuant to this paragraph shall not
be construed as finding or implying that such
instrument is or is not a security for any pur-
pose under the securities laws, or is or is not
an account, agreement, contract, or transaction
for any purpose under the Commodity Ex-
change Act.
‘‘(55) QUALIFIED INVESTOR.—
‘‘(A) DEFINITION.—For purposes of this
title and section 206(a)(1)(E) of the Financial
Services Act of 1998, the term ‘qualified inves-
tor’ means—
‘‘(i)
any
investment
company
reg-
istered with the Commission under section
8 of the Investment Company Act of 1940;
‘‘(ii) any issuer eligible for an exclu-
sion from the definition of investment com-
184
pany pursuant to section 3(c)(7) of the In-
vestment Company Act of 1940;
‘‘(iii) any bank (as defined in para-
graph (6) of this subsection), savings and
loan association (as defined in section 3(b)
of the Federal Deposit Insurance Act),
broker, dealer, insurance company (as de-
fined in section 2(a)(13) of the Securities
Act of 1933), or business development
company (as defined in section 2(a)(48) of
the Investment Company Act of 1940);
‘‘(iv) any small business investment
company licensed by the United States
Small Business Administration under sec-
tion 301(c) or (d) of the Small Business
Investment Act of 1958;
‘‘(v) any State sponsored employee
benefit plan, or any other employee benefit
plan, within the meaning of the Employee
Retirement Income Security Act of 1974,
other than an individual retirement ac-
count, if the investment decisions are made
by a plan fiduciary, as defined in section
3(21) of that Act, which is either a bank,
185
savings and loan association, insurance
company, or registered investment adviser;
‘‘(vi) any trust whose purchases of se-
curities are directed by a person described
in clauses (i) through (v) of this subpara-
graph;
‘‘(vii) any market intermediary ex-
empt under section 3(c)(2) of the Invest-
ment Company Act of 1940;
‘‘(viii) any associated person of a
broker or dealer other than a natural per-
son;
‘‘(ix) any foreign bank (as defined in
section 1(b)(7) of the International Bank-
ing Act of 1978); or
‘‘(x) the government of any foreign
country.
‘‘(B)
ADDITIONAL
QUALIFICATIONS
DE-
FINED.—For
purposes
of
paragraphs
(4)(B)(vii) and (5)(C)(iii) of this subsection,
and section 206(a)(1)(E) of the Financial Serv-
ices Act of 1998, the term ‘qualified investor’
also means—
‘‘(i)
any
corporation,
company,
or
partnership that owns and invests on a dis-
186
cretionary basis, not less than $10,000,000
in investments;
‘‘(ii) any natural person who owns
and invests on a discretionary basis, not
less than $10,000,000 in investments;
‘‘(iii) any government or political sub-
division, agency, or instrumentality of a
government who owns and invests on a dis-
cretionary basis not less than $50,000,000
in investments; or
‘‘(iv)
any
multinational
or
supra-
national entity or any agency or instru-
mentality thereof.
‘‘(C) ADDITIONAL AUTHORITY.—The Com-
mission may, by rule or order, define a ‘quali-
fied investor’ as any other person, other than a
natural person, taking into consideration such
factors as the person’s financial sophistication,
net worth, and knowledge and experience in fi-
nancial matters.’’.
SEC. 208. GOVERNMENT SECURITIES DEFINED.
Section 3(a)(42) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(42)) is amended—
(1) by striking ‘‘or’’ at the end of subparagraph
(C);