114 STAT. 2763A-378 PUBLIC LAW 106-554—APPENDIX E "(B) the agreement, contract, or transaction is entered into only between persons that are eligible contract participants described in subparagraph (A), (B)(ii), or (C) of section la(12)) at the time at which the persons enter into the agreement, contract, or transaction; and "(C) the agreement, contract, or transaction is executed or traded on an electronic trading facility.". SEC. 104. EXCLUDED ELECTRONIC TRADING FACILITIES. Section 2 of the Commodity Exchange Act (7 U.S.C. 2, 2a, 3, 4, 4a) is further amended by adding at the end the following: "(e) EXCLUDED ELECTRONIC TRADING FACILITIES. — "(1) IN GENERAL. —Nothing in this Act (other than section 12(e)(2)(B)) governs or is applicable to an electronic trading facility that limits transactions authorized to be conducted on its facilities to those satisfying the requirements of section 2(d)(2), 2(g), or 2(h)(3). "(2) EFFECT ON AUTHORITY TO ESTABLISH AND OPERATE.— Nothing in this Act shall prohibit a board of trade designated by the Commission as a contract market or derivatives transaction execution facility, or operating as an exempt board of trade from establishing and operating an electronic trading facility excluded under this Act pursuant to paragraph (1). "(3) EFFECT ON TRANSACTIONS. — No failure by an electronic trading facility to limit transactions as required by paragraph (1) of this subsection or to comply with section 2(h)(5) shall in itself affect the legality, validity, or enforceability of an agreement, contract, or transaction entered into or traded on the electronic trading facility or cause a participant on the system to be in violation of this Act. "(4) SPECIAL RULE. —^A person or group of persons that would not otherwise constitute a trading facility shall not be considered to be a trading facility solely as a result of the submission to a derivatives clearing organization of transactions executed on or through the person or group of persons.". SEC. 105. HYBRID INSTRUMENTS; SWAP TRANSACTIONS. (a) HYBRID INSTRUMENTS.— Section 2 of the Commodity Exchange Act (7 U.S.C. 2, 2a, 3, 4, 4a) is further amended by adding at the end the following: " (f) EXCLUSION FOR QUALIFYING HYBRID INSTRUMENTS.— "(1) IN GENERAL. —Nothing in this Act (other than section 12(e)(2)(B)) governs or is applicable to a hybrid instrument that is predominantly a security. " (2) PREDOMINANCE. —^A hybrid instrument shall be considered to be predominantly a security if— "(A) the issuer of the hybrid instrument receives pay- ment in full of the purchase price of the hybrid instrument, substantially contemporaneously with delivery of the hybrid instrument; "(B) the purchaser or holder of the hybrid instrument is not required to make any payment to the issuer in addition to the purchase price paid under subparagraph (A), whether as margin, settlement payment, or otherwise, during the life of the hybrid instrument or at maturity; "(C) the issuer of the hybrid instrument is not subject by the terms of the instrument to mark-to-market margining requirements; and
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