Insights of how loan information will be disseminated by FINRA post reporting of transactions and lifecycle events.
Status: SEC APPROVED RULES 2.1.25 Last Updated:
Proposed Rule 6540 (Dissemination of Loan Information) would provide for the public dissemination of securities loan data reported to SLATE and information pertaining to the aggregate loan transaction activity and distribution of loan rates for each Reportable Security.
The publicly available data would include:
(1) next day (T+1) loan-level data dissemination for Initial Covered Securities Loans and Loan Modifications (except for the loan amount);
(2) T+20 dissemination of the loan amount for Initial Covered Securities Loans and Loan Modifications; and
(3) daily loan statistics (i.e., aggregate loan activity and distribution of loan rates).
Partial Amendment No. 1 removed the subcategories of volume data from the aggregate loan transaction activity to be disseminated until experience is gained with the impact of disseminating volume data.
In particular, Partial Amendment No. 1 removed paragraphs (c)(1)(A) through (E) and amended proposed Rule 6540(c)(1) to provide that FINRA will disseminate the aggregate volume of securities subject to an Initial Covered Securities Loan or Modification to the amount of Reportable Securities loaned, reported on the prior business day.
In the FINRA Letter, FINRA stated that Rule 10c-1a requires an RNSA to disseminate “information pertaining to the aggregate transaction activity and distribution of loan rates for each reportable security. FINRA stated that the Commission did not specify the precise manner in which aggregate transaction activity or the distribution of loan rates would be compiled and disseminated by an RNSA, thereby providing FINRA with discretion as to the formulation of the data (so long as the “aggregate transaction activity” represented the absolute value of loan transactions). FINRA stated that, in determining what aggregate data is appropriate for public dissemination, it remains very sensitive to concerns regarding potential information leakage.
FINRA stated that this change is appropriate and that FINRA would revisit the possibility of enhancing the aggregate loan transaction activity in the future, after gaining experience with the impact of disseminating volume data and analysing what additional information could be useful (while continuing to be sensitive to potential information leakage concerns).
FINRA stated that any future amendments to the dissemination provisions would be subject to a separate proposed rule change filed with the Commission and subject to notice and comment.
Status: SEC APPROVED RULES 2.1.25 Last Updated:
In addition to T+1 loan-level data disseminated pursuant to proposed Rule 6540(a), FINRA would disseminate statistics regarding Covered Securities Loans reported to FINRA, including aggregate loan activity and distribution of loan rebate rates and lending fees.
Pursuant to paragraph (1) (Aggregate Loan Transaction Activity) of proposed Rule 6540(c), for each Reportable Security for which an Initial Covered Securities Loan or Loan Modification is reported to SLATE on a given business day, FINRA would disseminate, no later than the morning of the next business day, aggregated loan activity in the Reportable Security (along with the security identifier specified in Rule 6530(a)(2)(A) or (B) that FINRA determines is appropriate to disseminate).
As modified by Partial Amendment No. 1, the aggregated data would include, for each Reportable Security, under proposed Rule 6540(c)(1), the aggregate volume of securities subject to an Initial Covered Securities Loan or modification to the amount of Reportable Securities loaned, reported on the prior business day. Partial Amendment No. 1 removed the text “(both in total and by collateral type)” following the word “securities.”
FINRA stated that these data would provide the public with useful information concerning the daily lending activity in Reportable Securities, including insight into how this activity is distributed across collateral types.
Status: SEC APPROVED RULES 2.1.25 Last Updated:
Loan Rate Distribution Data of proposed Rule 6540(c), for each Reportable Security for which an Initial Covered Securities Loan or Loan Modification is reported to SLATE on a business day, FINRA would also disseminate, not later than the morning of the next business day, the security identifier (specified in Rule 6530(a)(2)(A) or (B)) that FINRA determines is appropriate to identify the relevant Reportable Security and information pertaining to the distribution of loan rebate rates or lending fees or rates, as applicable, including: the highest rebate rate, lowest rebate rate, and volume weighted average of the rebate rates by U.S. currency and non-U.S. currency, as applicable, reported to SLATE for Initial Covered Securities Loans collateralized by cash and, separately, for Loan Modifications collateralized by cash (where the Loan Modification involved a change to the rebate rate).
FINRA would also disseminate the highest lending fee or rate, lowest lending fee or rate, and volume weighted average of the lending fees or rates reported for Initial Covered Securities Loans not collateralized by cash and, separately, for Loan Modifications not collateralized by cash (where the Loan Modification involved a change to the lending fee or rate).
FINRA stated that these rate distribution metrics would provide market participants with both an overall view of the range of daily loan pricing for each Reportable Security, as well as insight into the relationship between loan rates/fees and loan amounts.
Status: SEC APPROVED RULES 2.1.25 Last Updated:
Proposed Rule 6550 (Emergency Authority) would provide that, as market conditions may warrant, FINRA, in consultation with the Commission, may suspend the reporting or dissemination of certain Covered Securities Loans, or the reporting of certain Data Elements or Confidential Data Elements or the dissemination of certain Data Elements for such period of time as FINRA deems necessary.
FINRA stated that this proposed rule is consistent with FINRA’s rules governing other reporting facilities that it operates.
Status: SEC APPROVED RULES 2.1.25 Last Updated:
Loan Transaction Information Not Disseminated, as modified by Partial Amendment No. 1, would specify that FINRA will not disseminate any Confidential Data Elements reported to SLATE.
Status: SEC APPROVED RULES 2.1.25 Last Updated:
Means of Data Dissemination, FINRA would make the data pursuant to proposed Rule 6540(a) through (c) available on FINRA’s website free of charge for personal, non-commercial purposes only.
For other uses, FINRA would publish or distribute SLATE data for fees that have been filed with the SEC pursuant to Rule 19b-4 under the Exchange Act.
Originally Proposed Provisions
Status: SEC APPROVED RULES 2.1.25 Last Updated:
Partial Amendment No. 1 also removed four other originally proposed provisions related to FINRA’s dissemination of aggregate loan transaction activity.
As originally proposed in the Notice, the aggregated loan transaction activity data disseminated pursuant to proposed Rule 6540(c)(1) would also have included under:
proposed Rule 6540(c)(1)(B), the aggregate volume of securities (both in total and broken down by collateral type) subject to a rebate rate or fee modification reported on the prior business day;
proposed Rule 6540(c)(1)(C), the aggregate volume of securities subject to an Initial Covered Securities Loan or modification to the amount of Reportable Securities loaned subject to a loan with a specified term and subject to a loan without a specified term reported on the prior business day;
proposed Rule 6540(c)(1)(D), the aggregate volume of securities subject to an Initial Covered Securities Loan or modification to the amount of Reportable Securities loaned to one or more borrower types specified in Rule 6530(a)(2)(N) reported on the prior business day; and
proposed Rule 6540(c)(1)(E), the aggregate number of Initial Covered Securities Loans and terminated Covered Securities Loans (both in total and broken down by collateral type) reported on the prior business day.
Status: SEC APPROVED RULES 2.1.25 Last Updated:
Under proposed Rule 6540(a) (Next Day Dissemination), as modified by Partial Amendment No. 1, for each Initial Covered Securities Loan and Loan Modification reported to SLATE on a given business day, no later than the morning of the next business day, FINRA would make publicly available:
(1) for an Initial Covered Securities Loan, the unique identifier assigned by FINRA to the Covered Securities Loan;
(2) for a Loan Modification, the unique identifier assigned by FINRA to the Covered Securities Loan if reported to SLATE or otherwise identified by FINRA;
(3) the security identifier(s) specified in Rule 6530(a)(2)(A) or (B) that FINRA determines is appropriate to disseminate; and
(4) the requisite Data Elements, except the amount of Reportable Securities loaned
Status: SEC APPROVED RULES 2.1.25 Last Updated:
As discussed in greater detail in the Notice, and as described in Partial Amendment No. 1, pursuant to Rule 6540(b) (Delayed Dissemination), for each Initial Covered Securities Loan and Loan Modification reported to SLATE, 20 business days after the date on which the Initial Covered Securities Loan was effected or the loan amount was modified, FINRA would make publicly available:
(1) for an Initial Covered Securities Loan, the unique identifier assigned by FINRA to the Covered Securities Loan;
(2) for a Loan Modification, the unique identifier assigned by FINRA to the Covered Securities Loan if reported to SLATE or otherwise identified by FINRA;
(3) the security identifier(s) specified in Rule 6530(a)(2)(A) or (B) that FINRA determines is appropriate to disseminate; and
(4) the amount of Reportable Securities loaned reported to SLATE. FINRA stated that, for Initial Covered Securities Loans, the 20-day delay period would begin the day after the Covered Securities Loan is effected (even in the case of late reports)
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