Effected & Agrees - Terminology

Effected & Agrees – Term Clarification

Status: SEC APPROVED RULES 2.1.25 Last Updated: 02 Jan 2025

The requirement for covered persons to report to FINRA, by the end of the day on which a covered securities loan is effected, specified loan information—which includes, among others, the date the covered securities loan was effected, the time the covered securities loan was effected, and the name of the platform or venue where the covered securities loan was effected— is established by Rule 10c-1a(c)(3)–(c)(5).

In adopting Rule 10c-1a, the Commission stated that whether or not a loan has been effected is a legal/factual question, and a delay in settlement (or if one of the agreed to loan terms is modified the next day) does not impact the initial requirement to report all loans (and modifications) within the required timeframes under Rule 10c-1a.

Further, the Commission stated that use of the term “agrees to” in the definition of covered person under Rule 10c-1a clarifies that covered securities loans are required to be reported after the parties agree to the loan, which is before settlement.

Parties to a securities loan may agree to some of the basic terms initially, but some or many of the securities loan terms may not be agreed to (or may be updated throughout the day and, thus, not finalized) until the end of the day.

The Proposal’s requirement for end-of-day reporting after a Covered Securities Loan has been “effected” is consistent with the requirement in Rule 10c-1a(c) that a covered person shall provide specified loan information to FINRA by the end of the day on which the covered securities loan is effected. The Proposal’s end-of-day reporting requirement, therefore, is reasonably designed and is appropriately balanced to facilitate the collection of timely information while helping to prevent an excessive number of incomplete or slightly modified reports that otherwise would occur throughout the day yet without providing sufficient incremental value.

Effected and Effective / Actual and Contractual Reporting

Status: TO BE REVIEWED Last Updated: 04 Jun 2025

Notes and Examples:

•  Some member firms shared that the USA market is a same day market and therefore view the settlement date and effective date as the same day.

  • Although this is factual it cannot be denied that systems dont always work to this same rule, hence what if you have a new trade booked today for a future settlement although this may be instructed on the actual day for settlement the system for regulatory reporting will surely need to report the trade on the trade date in a contractual nature and not wait for the actual settlement date.

• As the settlement date (Pre-existing Loan Modification and Modification lifecycle events) and modification effective date (all lifecycles) have been removed it was debated if this is an issue or not which then led to a conversation around actual and contractual reporting of life cycle events and how this looks for USA securities which has been mentioned operate in a same day market. 

• Under the SEC’s Rule 10c-1a, the term "effected" refers to the completion or execution of a securities lending transaction.

  • Specifically, the rule mandates that when a covered person effects, accepts, or facilitates a covered securities loan in the U.S., it becomes a reportable security under Rule 10c-1a.  This means that the transaction must be reported to a registered national securities association (RNSA) by the end of the day on which the loan was effected.

  • Require clarity on when lifecycle events should be reported, see here for current understanding can this please be validated?

    • Thinking about how lifecycle events can be effective meaning they could be for future or past dates:

      1. Effective Today Activity Date:

         1. Where all lifecycle events are effected today and effective today then report the lifecycle event at the end of day today = Actual

      2. Effective Future Activity Dates:

         1. New Trade:

            • Where New Trade lifecycle events are effected today but for a future effective date, report the lifecycle event at the end of day today = Contractual

         2. Partial Return:

            • Where Partial Returns lifecycle events are effected today but for a future effective date, report the lifecycle event at the end of the successful settlement date = Actual

            • What would the Event Date Time field be stamped with?

         3. Rate (Fee, Rebate or Spread) Change:

            • Where lifecycle events are effected today but for a future effective date, report the lifecycle event at the end of day on the effective date = Actual

            • What would the Event Date Time field be stamped with?

         4. All other Non-Settlement Related lifecycle events:

            • Where all other non-settlement lifecycle events are effected today but for a future effective date, report the lifecycle event at the end of day on the effective date = Actual

      3. Effective Past (as of) Activity Dates:

         • Where all lifecycle events are effected today but for a past effective dates, report the lifecycle event at the end of day today = Actual

      4. For Terminations see:

         1. Termination Date & Term Date & Terminated Loan Indicator page