Proposed Rule 10c-1 will satisfy the order by making it mandatory for lenders of securities to submit the pricing and other material terms of securities lending transactions to a registered national securities association (RNSA), such as the Financial Industry Regulatory Authority.

The SEC expects the proposed rule will address the issues of limited information available to US market participants and regulators about securities lending and that market data being incomplete, decentralized, and inaccessible to the general public. Problems such as these: (1) create inefficiencies in the securities lending market and make it difficult for borrowers and lenders to know whether the terms of their loans are consistent with market conditions, and (2) affect the ability of the SEC, RNSAs, other self-regulatory organizations, and other Federal financial regulators to oversee transactions that are vital to fair, orderly, and efficient markets.

In particular, the terms to be provided to the RNSA and made accessible to the public by the RNSA include:

• Legal name of the issuer of the securities to be borrowed
• Ticker symbol of those securities
• Time and date of the loan
• Name of the platform or venue, if one is used
• Amount of securities loaned
• Rates, fees, charges and rebates for the loan as applicable
• Type of collateral provided for the loan and the percentage of the collateral provided to the value of the loaned securities
• Termination date of the loan if applicable
• Borrower type (for example, broker, dealer, bank, customer, clearing agency, or custodian)

The following loan terms would be provided to an RNSA but would not be made public: 

1. The legal names of the parties to the loan
2. When the lender is a broker-dealer, whether the security loaned to its customer is loaned from the broker-dealer’s inventory
3. Whether the loan will be used to close out a fail to deliver pursuant to Rule 204 of Regulation SHO or whether the loan is being used to close out a fail to deliver outside of Regulation SHO

To follow the securities lending transaction, the proposed rule would make it mandatory for RNSAs to assign a unique transaction identifier to each securities lending transaction. If the modifications to the loan involved any of the loan terms mentioned above, loan modifications would be provided to the RNSA. The terms of the loan modification would be publicly available.

Under proposed Rule 10c-1, information concerning securities on loan or available to loan must be provided to the RNSA by the end of each business day. This information would be made accessible to the public by the RNSA on an aggregated basis.

The public is invited to respond to proposed Rule 10c-1 during the comment period, which will remain open for 30 days following publication in the Federal Register. Instructions for submitting feedback are detailed in the Reporting of Securities Loans proposed rule on sec.gov.

For more information, contact Theresa Hajost, Special Counsel, Samuel Litz, Special Counsel, John Guidroz, Branch Chief, Josephine Tao, Assistant Director, Office of Trading Practices, Division of Trading and Markets, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549, at (202) 551-5777.

Source:

SEC Proposes Rule to Provide Transparency in the Securities Lending Market (sec.gov)

Reporting of Securities Loans - Proposed Rule (sec.gov)

Securities Lending Transparency - Fact Sheet (sec.gov)