General Rules and Regulations
promulgated
under the
Securities Exchange Act of 1934
Rule 36a1-1 -- Exemption from Section 7 for OTC Derivatives Dealers
Preliminary Note:OTC derivatives dealers are a special class of broker-
dealers that are exempt from certain broker-dealer requirements, including membership
in a self-regulatory organization (Rule 15b9-2), regular
broker-dealer margin rules (Rule 36a1-1), and application of the Securities Investor
Protection Act of 1970 (Rule 36a1-2). OTC derivative
dealers are subject to special requirements, including limitations on the scope of
their securities activities (Rule 15a-1), specified
internal risk management control systems (Rule 15c3-4),
recordkeeping obligations (Rule 17a-3(a)(10)),
and reporting responsibilities (Rule 17a-12). They
are also subject to alternative net capital treatment (Rule
15c3-1(a)(5)).
Except as otherwise provided in paragraph (b) of this
section, transactions involving the extension of credit by an OTC derivatives dealer
shall be exempt from the provisions of section 7(c)
of the Act, provided that the OTC derivatives dealer complies with section
7(d) of the Act.
The exemption provided under paragraph (a) of this section
shall not apply to extensions of credit made directly by a registered broker or dealer
(other than an OTC derivatives dealer) in connection with transactions in eligible
OTC derivative instruments for which an OTC derivatives dealer acts as counterparty.
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