See here all information required for correct reporting under SEC 10c-1a.
Status: SEC APPROVED RULES 2.1.25 Last Updated:
Proposed Rule 6530(a) would govern the reporting requirements applicable to Covered Persons for reporting Initial Covered Securities Loans.
Proposed Rule 651018 would define “Initial Covered Securities Loan” as a new Covered Securities Loan not previously reported to SLATE.
The definitions of “Covered Person” and “Covered Securities Loan” for the purposes of this proposed rule change would be the same as set forth in Rule 10c-1a.
Initial Covered Securities Loans would be required to be reported within the time periods outlined in proposed Rule 6530(a)(1) (When and How Initial Covered Securities Loans Are Reported).
Specifically, as modified by Partial Amendment No. 1, for Initial Covered Securities Loans effected on a business day at or after 12:00:00 a.m. Eastern Time (“ET”) through 7:00:00 p.m. ET the required information must be reported the same day by 11:59:59 p.m. ET.
Additionally, as modified by Partial Amendment No. 1, for Initial Covered Securities Loans effected on a business day after 7:00:00 p.m. ET, the required information must be reported no later than the next business day (T+1) by 11:59:59 p.m. ET;
Initial Covered Securities Loans effected on a Saturday, a Sunday, a federal or religious holiday, or other day on which SLATE is not open at any time during that day (determined using ET) must be reported the next business day (T+1) by 11:59:59 p.m. ET.
Status: SEC APPROVED RULES 2.1.25 Last Updated:
Proposed Rule 6530(a)(2) (Loan Information To Be Reported) would specify the items of information that must be reported to FINRA. Specifically, as modified by Partial Amendment No. 1,22 proposed Rule 6530(a)(2)(A) through (L) would require that Initial Covered Securities Loan reports must contain the below x12 non-confidential data elements:
(A) The legal name of the security issuer and the Legal Entity Identifier (“LEI”) of the issuer (if the issuer has a non-lapsed LEI)
(B) Security symbol, CUSIP, ISIN, or FIGI, or other security identifier
(C) The date the Covered Securities Loan was effected;
(D) The time the Covered Securities Loan was effected;
(E) The name of the platform or venue where the Covered Securities Loan was effected
(F) The amount of the Reportable Securities loaned
Proposed Rule 6530(a)(3) specifies that, for a Covered Securities Loan of a security reportable to CAT, a Covered Person must report the number of shares loaned. For a Covered Securities Loan of a security reportable to Trade Reporting and Compliance Engine (“TRACE”) or the Municipal Securities Rulemaking Board’s Real-Time Transaction Reporting System (“RTRS”), a Covered Person must report the total par value of the securities loaned. Notice, 89 FR 38206 n.29.
(G) The type of collateral used to secure the Covered Securities Loan
(H) For a Covered Securities Loan collateralized by cash, the rebate rate or any other fee or charges
(I) For a Covered Securities Loan not collateralized by cash, the securities lending fee or rate, or any other fee or charges
(J) The percentage of collateral to value of Reportable Securities loaned required to secure such Covered Securities Loan
(K) The termination date of the Covered Securities Loan
(L) Whether the borrower is a Broker or Dealer, a customer (if the person lending securities is a Broker or Dealer), a Clearing Agency, a Bank, a Custodian, or other person.
As modified by Partial Amendment No. 1,30 proposed Rule 6530(a)(2)(M) through (U) would also require that Initial Covered Securities Loan reports contain the x9 below confidential data elements:
(M) If known, the market participant identifier (“MPID”) of the Covered Person
(N) If known, the legal name of each party to the Covered Securities Loan (other than the customer from whom a Broker or Dealer borrows fully paid or excess margin securities pursuant to SEA Rule 15c3-3(b)(3));
(O) If known, the CRD Number or Investment Adviser Registration Depository (“IARD”) Number of each party to the Covered Securities Loan;
(P) If known, the MPID of each party to the Covered Securities Loan;
(Q) If known, the LEI of each party to the Covered Securities Loan;
(R) If known, whether each party to the Covered Securities Loan is the lender, the borrower, or an intermediary between the lender and the borrower;
(S) If the person lending securities is a Broker or Dealer and the borrower is its customer, whether the security is loaned from the Broker’s or Dealer’s securities inventory to a33 customer of such Broker or Dealer;
(T) If known, whether the Covered Securities Loan is being used to close out a fail to deliver pursuant to Rule 204 of SEC Regulation SHO or to close out a fail to deliver outside of Regulation SHO; and
(U) Where a Covered Person’s daily submission includes two or more reports related to the same Covered Securities Loan (e.g., an Initial Covered Securities Loan and a Loan Modification to terminate the Covered Securities Loan) and FINRA has not yet assigned a unique identifier to the Initial Covered Securities Loan, a unique identifier assigned to the Covered Securities Loan by the Covered Person responsible for reporting the loan to SLATE.
As originally proposed in the Notice, this data element (U) would have provided the following: “The unique internal identifier assigned to the Covered Securities Loan by the Covered Person responsible for reporting the loan to SLATE.”
Status: SEC APPROVED RULES 2.1.25 Last Updated:
Identified data elements initially required to be reported under the proposed rule change, as originally proposed in the Notice, that were not included under Rule 10c-1a, including:
the expected settlement date of the Covered Securities Loan;
any other fees or charges (i.e., the dollar cost of any other fees or charges in addition to the rebate rate or securities lending fee separately required to be reported);
In light of the removal of the text “any other fees or charges” as a data element that must be reported separately from the rebate rate (for a Covered Securities Loan collateralized by cash) or the securities lending fee (for a Covered Securities Loan not collateralized by cash), as applicable, Partial Amendment No. 1 also added the text “or any other fee or charges” to the Covered Securities Loan information specified in proposed Rule 6530(a)(2)(H) and the text “or rate, or any other fee or charges” to the Covered Securities Loan information specified in proposed Rule 6530(a)(2)(I).
whether the Covered Person is the lender, borrower, or intermediary;
if the Covered Securities Loan is an allocation of an omnibus loan effected pursuant to an agency lending agreement, the unique internal identifier for the associated omnibus loan assigned by the Covered Person responsible for reporting the Covered Securities Loan to SLATE;
the expected settlement date for modifications to the loan amount (if the expected settlement date is a date other than the date of the Loan Modification), or the effective date for all other Loan Modifications (if effective date is a date other than the date of the Loan Modification);
such modifiers and indicators as are required by FINRA under the Rule 6500 Series or the SLATE Participant specification;
Exclusive Arrangement;
Loan to Affiliate;
Unsettled Loan;
Terminated Loan;
Rate or Fee Adjustment; and
Basket Loan.
the unique internal identifier assigned to the Covered Securities Loan by the Covered Person responsible for reporting the loan to SLATE.
With the exception of the data element concerning the unique identifier (clientUniqueLoanId example lifecycle being New Loan Event Sequence 4) assigned to the Covered Securities Loan by the Covered Person responsible for reporting the loan to SLATE, where a Covered Person’s daily submission includes two or more reports related to the same Covered Securities Loan, and FINRA has not yet assigned a unique identifier to the Initial Covered Securities Loan, all of the additional data elements listed above that commenters objected to as being beyond the scope of Rule 10c-1a were removed in Partial Amendment No. 1.
However, to allow FINRA to link same-day T+0 reports that relate to the same Covered Securities Loan in fulfilling its data dissemination obligations under Rule 10c-1a(g), Partial Amendment No. 1 added proposed Rule 6530(a)(2)(U), which is a targeted provision providing that, where a Covered Person’s daily submission includes two or more reports related to the same Covered Securities Loan (e.g., an Initial Covered Securities Loan and a Loan Modification to terminate the Covered Securities Loan), and FINRA has not yet assigned a unique identifier to the Initial Covered Securities Loan, the Covered Person must report a unique identifier assigned to the Covered Securities Loan by the Covered Person responsible for reporting the loan to SLATE. FINRA stated that this requirement is limited to instances where a Covered Person’s daily submission includes two or more T+0 reports related to the same Covered Securities Loan—which is the circumstance that gives rise to the audit trail gap sought to be addressed by the requirement.
Similarly, with respect to Loan Modifications, where a Covered Person’s daily submission includes two or more T+0 reports related to the same Covered Securities Loan, the Covered Person must report the identifier that was provided with respect to the associated same-day report for that Covered Securities Loan.
FINRA stated that, without a way to link such reports, it would be unable to accurately incorporate modifications into the daily loan statistics where FINRA cannot identify the amount of securities impacted by the modification.
FINRA stated that this requirement is necessary to allow FINRA to link same-day reports that relate to the same Covered Securities Loan, which allows FINRA to accurately record transactions reported pursuant to Rule 10c-1a and to incorporate modifications into the daily loan statistics.
Status: SEC APPROVED RULES 2.1.25 Last Updated:
Partial Amendment No. 1 removed the originally proposed requirement for the reporting of certain information, including the Unsettled Loan indicator, the expected settlement date for Covered Securities Loans, and the expected settlement date for modifications to the loan amount (if the expected settlement date is a date other than the date of the loan modification). FINRA stated that it eliminated the settlement-related elements in the interest of achieving the timely implementation of SLATE.
Status: FINALISED Last Updated:
Such modifiers and indicators as are no longer required by FINRA under the Rule 6500 Series or the SLATE Participant specification;
Exclusive Arrangement;
Loan to Affiliate;
Unsettled Loan;
Terminated Loan;
Rate or Fee Adjustment; and
Basket Loan.
Status: SEC APPROVED RULES 2.1.25 Last Updated:
FINRA provided the example that a Covered Person that agrees to a Covered Securities Loan that ultimately does not settle would still be required to report the termination of that loan pursuant to proposed Rule 6530(b)(2) by submitting a Loan Modification to terminate a Covered Securities Loan.
However, because the securities were never transferred to the borrower, the Loan Modification termination report would not modify the loan amount to zero (unlike in the case of a loan that was terminated because the shares were returned, which would modify the loan amount to zero), which would allow FINRA to identify the loan as being terminated because it was unsettled as opposed to a return of shares.
Termination Date & Term Date & Terminated Loan Indicator
Status: SEC APPROVED RULES 2.1.25 Last Updated:
FINRA stated that, while FINRA removed the requirement that Covered Persons append a Terminated Loan indicator, FINRA is retaining the requirement that Covered Persons populate a field with the termination date of the Covered Securities Loan, which is expressly required to be reported to an RNSA under Rule 10c-1a(c)(11).
(Tenor of the trade i.e. Open or Term) Accordingly, FINRA stated that, when reporting to SLATE an Initial Covered Securities Loan that is an open loan, a Covered Person would be required to leave the term date field blank; when reporting an Initial Covered Securities Loan that is a term loan, a Covered Person would report the loan’s termination date in the termination date field. Partial Amendment No. 1, 89 FR 92229 n.20.
Status: TO BE REVIEWED Last Updated:
See Termination Date and Term Date Lifecycles, Sequences and Fields below in conjunction with the removed Terminated Loan Indicator field across the different lifecycle events:
Termination Date: Should be used to report the termination of an open term trade or the early termination of a fixed term trade
Term Date: Defines the tenor of the trade whether this be an open term or fixed term tenor
Terminated Loan Indicator: Field and lifecycle events removed under Tech specs revision v1.1
Example Questions to work through:
Open Term & Termination Date:
So if you had a new loan not a pre-existing loan, then you would report sequence 25 below New Loan Event and leave blank
If in 2 weeks time this loan was closed / terminated then you would report sequence 12 modification and leave this field blank.
You would also report sequence 10 correction and populate the date of the termination of the trade.
Questions?
What should be the Event Date Time of this sequence 12 modification?
On Open term tenor trades should you report the termination date only on the day the trade is terminated = actual, or if knowing prior to the termination date report this sooner being contractual? Answer: as per new description details below “Will reject if date is before System Start Date or is a future date” meaning this can only be done on the actual day.
Settlement:
If the trade successfully settles you would populate the loan quantity as ZERO
Unsettled: If the trade does not settle you would leave the instructed quantity and not reduce the loan quantity to ZERO
Term Loan & Termination Date:
If the loan is a Fixed Term Trade then you would populate sequence 25 term date with the Fixed term date
If the original Fixed term date i.e. the tenor were to change to a new / different Fixed term date you would use sequence 12 modification to modify the original Fixed term date either moving the original Fixed term date out further or in earlier
If the Fixed term trade was to terminate earlier than the original Fixed term date tenor, you would then report sequence 10 correction and populate the date of the termination of the trade.
Questions?
What should be the Event Date Time of this sequence 12 modification?
Where a Fixed term trade terminates earlier than the original Fixed Term date being TODAY you should report sequence 10 correction and populate the date of the termination of the trade for TODAY’s date ?
Where the original Fixed term trade date is changed / amended earlier than the original Fixed term date but is greater than TODAY you would report sequence 12 modification and modify the new Fixed term date, to that date, greater than TODAY ?
Settlement:
If the trade successfully settles you would populate the loan quantity as ZERO
Unsettled: If the trade does not settle you would leave the instructed quantity and not reduce the loan quantity to ZERO
A covered person that agrees to a covered securities loan that ultimately does not settle would still be required to report the termination of that loan pursuant to proposed Rule 6530(b)(2) by submitting a loan modification to terminate a covered securities loan. However, because the securities were never transferred to the borrower, the loan modification termination report would not include a modification of the loan amount to zero (unlike in the case of a loan that was terminated because the shares were returned), which would allow FINRA to identify the loan as being terminated because it was unsettled as opposed to a return of shares.
Again, upon the termination of either an open or a term loan, a covered person would be required to submit a loan modification sequence 12 report to terminate the covered securities loan, which would reflect a loan quantity of zero—allowing FINRA to identify that the loan has been terminated. See adopting Release, 88 FR 75644, 75672 n.426.
See below the sequences, field names and lifecycle events for:
Termination Date, Term Date and the removal of the Terminated Loan Indicator
Status: SEC APPROVED RULES 2.1.25 Last Updated:
With respect to the comment that the parties to the loan do not know the identity of the counterparty until the loan is settled, proposed Rule 6530(a)(2)(N) uses the qualifier “if known” with respect to the requirement for a SLATE report for an Initial Covered Securities Loan to include the legal name of each party to the Covered Securities Loan (other than the customer from whom a Broker or Dealer borrows fully paid or excess margin securities pursuant to Rule 15c3-3(b)(3)).
FINRA’s use of the qualifier “if known” in proposed Rule 6530(a)(2)(N) mirrors that used in Rule 10c-1a(e)(1), which concerns the legal name of each party to a covered securities loan.
Proposed Rule 6530(a)(2)(N), therefore, is reasonably designed to facilitate the collection of loan information consistent with Rule 10c-1a(e)(1).
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