Despite the textbook by Jarrow and Turnbull of the same name, Derivative Securities, financial derivatives are not necessarily securities. From Wall Street Words, a security is "an instrument that, for a stock, shows ownership in a firm; for a bond, indicates a creditor relationship with a firm or with a federal, state, or local government; or signifies other rights to ownership." More intuitively, a security has identity and existence apart from its owner and is transferable through some means, while many if not most financial derivatives are executable contracts, with no life or existence apart from the initiating counterparties.
This is not merely nitpicking; it weighs heavily (especially in the United States) upon court proceedings when things go awry. The Federal courts in the U.S. have sometimes ruled that derivatives are securities -- thus subject to the SEC Act of 1933, and sometimes ruled they are not.
As to the introduction, it neither captures what makes derivatives derivatives, or indeed includes all flavors of derivatives.
I guess it depends on whose definition of security you use. Check the bottom of that article; I have quoted the relevant section from the 1934 act. I suppose some derivative contracts would not be covered under that but it does surprise me that federal courts would rule some things would not fall under the SEC's jurisdiction. Do you have any links to show that? Either way that is the way they are commonly known, so the name of the article is still correct. The text could be altered a bit to note the discrepancy you point out though.
Oh, and I forgot, the US is not the only thing that matters here. What about Europe, Asia, Oceana, etc? I kind of don't know...
Are derivatives securities?
