Final answer:
Eligible securities can be used as collateral for borrowing funds. Securities subject to SHO rules can be shorted by investors. Marginable and shortable securities can be traded in all U.S. securities markets.
Step-by-step explanation:
Securities that are eligible for margin trading are those that can be used as collateral for borrowing funds to invest in more securities. These securities can be bought on margin, meaning the investor only puts up a portion of the total value of the security. Eligible securities are typically listed on major stock exchanges such as NYSE and NASDAQ.
Securities subject to the Securities Borrowing and Lending (SHO) rules are those that can be shorted by investors. When an investor shorts a security, they borrow the security from another investor and sell it in the market with the expectation of buying it back at a lower price. Shortable securities are subject to specific regulations, including the SHO rules, which aim to prevent abusive short-selling practices.
Marginable securities and shortable securities can be traded in all U.S. securities markets, including major stock exchanges like NYSE and NASDAQ, as well as over-the-counter (OTC) markets and foreign markets.