Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Partial Amendment No. 1 to Proposed Rule Change To Adopt the FINRA Rule 6500 Series (Securities Lending and Transparency Engine (SLATETM)), 92228-92235 [2024-27223]
Download as PDF
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Federal Register / Vol. 89, No. 225 / Thursday, November 21, 2024 / Notices
employees spend time on matters
relating to the management of
Applicant’s investment securities.
Applicant states that none of its officers,
directors or employees spends or
proposes to spend of his or her time to
the management of Capital Preservation
Instruments on behalf of Applicant.
d. Nature of Assets. Applicant states
that, as of October 31, 2023, Applicant’s
investment securities constituted
approximately 30.1% of its total assets
(excluding Government securities and
cash items) on an unconsolidated basis.4
Furthermore, Applicant states that as of
October 31, 2023, 100% of its
investment securities consist of Capital
Preservation Instruments. Applicant
states that it uses its Capital
Preservation Instruments to finance its
continued operations in connection
with the development of the Company’s
software. Applicant states that it may in
the future make strategic investments in
‘‘other investments’’ consistent with
Rule 3a–8. Applicant states, however,
that no more than 10% of its total assets
(exclusive of Government securities and
cash items, including securities issued
by money market funds registered under
the Act) will consist of investment
securities other than Capital
Preservation Instruments.5 Applicant
states that it uses current assets,
including its Capital Preservation
Instruments, to finance its continued
R&D program and operations in
connection with the development of the
Applicant’s software.
e. Sources of Income and Revenue.
Applicant represents that since its
inception it has carried net operating
losses. Applicant states that it does,
however, derive income from its
investment securities. Applicant states
that a review of its current source of
revenues provides a more accurate
review of its operating company status,
particularly, given the upward trend in
recognizing substantially increased
revenues due to sales of new
subscriptions. Applicant states that it
recognizes substantially all of its
revenues from fees based on
subscriptions and support. Applicant
states that its revenues for the fiscal
years ended July 31, 2020, 2021, 2022,
and 2023 were $431.3 million, $673.1
million, $1,090.9 million, and $1,671
million, respectively, on an
unconsolidated basis. By contrast,
Applicant states that its net investment
4 Applicant states that one of its subsidiaries
holds investment securities.
5 Applicant states that it intends to calculate this
percentage by consolidating its financial statements
with the financial statements of its wholly-owned
subsidiaries (but not with any majority-owned
subsidiaries that may be acquired in the future).
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18:02 Nov 20, 2024
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income in its fiscal years of 2021, 2022,
and 2023 was $2.8 million, $4.6 million,
and $60.5 million, respectively.
Applicant states that all such income
was derived from Capital Preservation
Instruments.6 Applicant states that if net
investment income were compared to its
revenue, it would be less than 4% of
revenue for the fiscal year ended July
31, 2023, and equal to less than 0.5% of
revenue for the fiscal year ended July
31, 2022.
For the fiscal three months ended
October 31, 2023, Applicant states that
it earned $25.9 million of net
investment income, an increase
compared to $7.9 million for the first
three months ended October 31, 2022.
Applicant states that this nonetheless
represents less than 5.5% of revenue for
the three months ended October 31,
2023. Applicant states that the increase
in net investment income is due to the
increase in interest rates in the fixed
income markets.
7. Applicant asserts that its historical
development, its public representations
of policy, the activities of its officers
and directors, the nature of its assets
and its sources of revenue and income,
as discussed in the application,
demonstrate that it is engaged primarily
in a business other than that of
investing, reinvesting, owning, holding
or trading securities. Applicant thus
asserts that it satisfies the criteria for
issuing an order under Section 3(b)(2) of
the Act.
Applicant’s Conditions
Applicant agrees that an order granted
pursuant to the application will be
subject to the following conditions:
1. Applicant will continue to use its
accumulated cash and securities to
support its primary business (as such
business is described in this
Application);
2. Applicant will refrain from
investing or trading in securities for
speculative purposes; and
3. No more than 10% of Applicant’s
total assets will consist of investment
securities other than Capital
Preservation Instruments (as such
capitalized term is defined in
Applicant’s application). For purposes
of this condition, total assets excludes
cash items (including securities issued
by money market funds registered under
the Act) and Government securities (as
defined in Section 2(a)(16) of the Act).
This percentage is to be determined on
an unconsolidated basis, except that
Applicant should consolidate its
6 Applicant states that is has not, and does not
expect to, earn investment income from strategic
investments.
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financial statements with the financial
statements of any wholly-owned
subsidiaries.
For the Commission, by the Division of
Investment Management, under delegated
authority.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024–27158 Filed 11–20–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–101645; File No. SR–
FINRA–2024–007]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Partial
Amendment No. 1 to Proposed Rule
Change To Adopt the FINRA Rule 6500
Series (Securities Lending and
Transparency Engine (SLATETM))
November 15, 2024.
I. Introduction
On May 1, 2024, the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) filed with the Securities and
Exchange Commission (‘‘SEC’’ or
‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’ or ‘‘Exchange Act’’) 1 and
Rule 19b–4 thereunder,2 a proposed rule
change (SR–FINRA–2024–007) to adopt
the new FINRA Rule 6500 Series
(Securities Lending and Transparency
Engine (SLATETM)) to (1) require
reporting of securities loans; and (2)
provide for the public dissemination of
loan information. The proposed rule
change was published for comment in
the Federal Register on May 7, 2024.3
On June 10, 2024, pursuant to Section
19(b)(2) of the Act,4 the Commission
designated a longer period within which
to approve the proposed rule change,
disapprove the proposed rule change, or
institute proceedings to determine
whether to disapprove the proposed
rule change.5 On August 5, 2024, the
Commission instituted proceedings
under Section 19(b)(2)(B) of the Act 6 to
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 100046
(May 1, 2024), 89 FR 38203 (May 7, 2024)
(‘‘Notice’’). Comments received on the proposed
rule change are available at: https://www.sec.gov/
comments/sr-finra-2024-007/srfinra2024007.htm.
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 100305
(June 10, 2024), 89 FR 50644 (June 14, 2024). The
Commission designated August 5, 2024, as the date
by which the Commission shall approve or
disapprove, or institute proceedings to determine
whether to disapprove, the proposed rule change.
6 15 U.S.C. 78s(b)(2)(B).
2 17
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determine whether to approve or
disapprove the proposed rule change.7
On October 28, 2024, the Commission,
pursuant to Section 19(b)(2) of the Act,8
designated January 2, 2025, as the date
by which the Commission shall either
approve or disapprove the proposed
rule change.9 On November 14, 2024,
FINRA responded to comments 10 and
filed a partial amendment to the
proposed rule change in response to
certain comments on the proposed rule
change (‘‘Partial Amendment No. 1’’).
Partial Amendment No. 1 is described
in Item II below, which has been
substantially prepared by FINRA.11 The
Commission is publishing this notice to
solicit comments on Partial Amendment
No. 1 from interested persons.12
II. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Partial Amendment
FINRA is proposing the following
amendments to the filing: 13
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1. Reporting Intraday Loan
Modifications and Changes to the
Parties to a Loan
FINRA is proposing to amend the
Original Proposal to delete the
supplementary material regarding the
reporting of intraday loans
(Supplementary Material .01 (Intraday
Loan Modifications)) and changes to the
parties to a loan, including in the
context of reallocating omnibus loans
(Supplementary Material .02 (Changes
to the Parties to a Covered Securities
Loan)). As originally proposed, Rule
6530.01 provided that, if a covered
securities loan 14 is modified multiple
7 See Securities Exchange Act Release No. 100655
(August 5, 2024), 89 FR 65441 (August 9, 2024).
8 15 U.S.C. 78s(b)(2).
9 See Securities Exchange Act Release No. 101450
(October 28, 2024), 89 FR 87448 (November 1,
2024).
10 See Letter from Racquel L. Russell, Senior Vice
President, Director of Capital Markets Policy, Office
of General Counsel, FINRA, dated November 14,
2024 (responding to comments regarding File No.
SR–FINRA–2024–007) (‘‘Response to Comments,
SR–FINRA–2024–007’’).
11 The Commission has reformatted FINRA’s
presentation of its proposed modifications to, and
descriptions of, the proposed rule change.
12 Partial Amendment No. 1 is also available on
FINRA’s website at https://www.finra.org/rulesguidance/rule-filings/sr-finra-2024-007.
13 In addition to the amendments described
below, FINRA has made conforming changes to
proposed Rule 6510 and proposed Rule 6540(d).
FINRA has also made textual changes to better align
with the language of SEA Rule 10c–1a.
14 See 17 CFR 240.10c–1a (‘‘SEA Rule 10c–1a’’)
and proposed FINRA Rule 6510 for definitions of
the terms ‘‘covered securities loan,’’ ‘‘covered
person,’’ and ‘‘reporting agent’’ as used throughout
Partial Amendment No. 1. See proposed FINRA
Rule 6510 for definitions of the terms ‘‘initial
covered securities loan’’ and ‘‘loan modification’’ as
used throughout Partial Amendment No. 1.
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times throughout the day, a covered
person must report each loan
modification as set forth in proposed
Rule 6530(b). Some commenters
objected to Supplementary Material .01,
stating that it was inconsistent with SEA
Rule 10c–1a, that intraday reporting was
not required and that only end-of-day
reporting was mandated under the
Commission’s rule.15 As originally
proposed, Rule 6530.02 generally
provided that, following the addition or
removal of a party required to be
identified pursuant to Rule
6530(a)(2)(O), a covered person must
report the termination of the previously
reported loan and report an initial loan
reflecting the new parties to the loan, if
known. One commenter asserted that
proposed Rule 6530.02 contradicts a
decision by the Commission not to treat
reallocations among a pooled loan’s
underlying constituents as a new
covered securities loan or as a loan
modification.16
In Partial Amendment No. 1, FINRA
is proposing to amend the Original
Proposal to delete both Supplementary
Material .01 and .02. Proposed Rule
6530 is not intended to alter when loan
events are required to be reported as
loan modifications (including
terminations) under SEA Rule 10c–1a or
when new loans must be reported under
SEA Rule 10c–1a. Thus, under FINRA’s
proposed rule, covered persons must
report modifications consistent with the
Commission’s rule and as described in
the SEA Rule 10c–1a adopting release.17
Similarly, covered persons must report
reallocations of loans in a manner
consistent with SEA Rule 10c–1a and
the Adopting Release. To the extent a
loan event is not reportable under SEA
Rule 10c–1a, there would likewise be no
SLATE reporting obligations.
2. Modifiers and Indicators
FINRA is proposing to amend the
Original Proposal to delete the proposed
modifier and indicator requirements. As
originally proposed, covered persons
would have been required to append
specific modifiers and indicators when
reporting initial covered securities loans
and loan modifications to SLATE.
Specifically, proposed Rule 6530(c)
(Modifiers and Indicators) would have
required a covered person to identify (1)
exclusive arrangements, (2) loans to
affiliates, (3) unsettled loans, (4)
15 See Partial Amendment No. 1; see also,
Response to Comments, SR–FINRA–2024–007.
16 See Partial Amendment No. 1; see also,
Response to Comments, SR–FINRA–2024–007.
17 Securities Exchange Act Release No. 98737
(October 13, 2023), 88 FR 75644 (November 3, 2023)
(Reporting of Securities Loans) (‘‘Adopting
Release’’).
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92229
terminated loans, (5) rate or fee
adjustments, and (6) basket loans.
FINRA originally proposed these
modifiers and indicators to provide
regulators and the public with
important information, including where
the reported rates may not reflect
current market rates, and to enhance the
disseminated data and its value to
market participants and better inform
the reported rates validation process.18
Industry commenters expressed a
variety of concerns regarding the
proposed modifiers and indicators,
including that these items of
information extended beyond the data
elements specified in SEA Rule 10c–1a,
increased the rule’s complexity and
implementation burdens, and may raise
information leakage concerns.19
In Partial Amendment No. 1, FINRA
is proposing to amend the Original
Proposal to delete the modifier and
indicator requirements. Specifically,
Partial Amendment No. 1 would delete
Rule 6530(c) to remove the specific
requirements related to modifiers and
indicators to identify (1) exclusive
arrangements, (2) loans to affiliates, (3)
unsettled loans, (4) terminated loans,20
(5) rate or fee adjustments, and (6)
basket loans.21
FINRA also proposes to delete the
requirements in proposed Rule
6530(a)(2)(Y) and proposed Rule
6530(b)(2)(I), which state that covered
persons must report the modifiers and
18 See
Notice, 89 FR 38203, 38208.
Partial Amendment No. 1; see also,
Response to Comments, SR–FINRA–2024–007.
20 While FINRA is proposing to delete 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 SEA Rule 10c–1a(c)(11). When
reporting an initial covered securities loan to
SLATE that is an open loan, a covered person
would be required to leave the termination 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. Upon the termination of
either an open or a term loan, a covered person
would be required to submit a loan modification
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 generally, Adopting Release, 88 FR
75644, 75672 n.426.
21 While Partial Amendment No. 1 removes
several of the originally proposed fields and the
proposed indicators and modifiers to facilitate a
timely initial implementation of SLATE, the
absence of these elements may impact the quality
and completeness of the resultant SLATE data.
After gaining experience with the operation of
SLATE and the initial data set, FINRA will
reevaluate whether any future enhancements to the
SLATE reporting requirements are appropriate,
including to improve the quality and completeness
of SLATE data. Any such efforts would be subject
to a separate proposed rule change with the
Commission and subject to notice and comment.
19 See
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indicators as required by either the Rule
6500 Series or the SLATE participant
specification. Partial Amendment No. 1
also would amend proposed Rule 6510
(Definitions) to remove the definition of
the term ‘‘affiliate,’’ as it is no longer
needed given the deletion of the related
indicator. FINRA believes it is
appropriate, at this time, to delete these
aspects of the Original Proposal to
facilitate the achievement of the initial
SLATE reporting requirements in a
timely manner.22
3. Settlement Date and Effective Date
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FINRA is proposing to amend the
Original Proposal to remove the
requirements that covered persons
report the settlement date and effective
date in covered securities loan reports.
As originally proposed, covered persons
would have been required to report: (1)
the expected settlement date for initial
covered securities loans; (2) the
expected settlement date for
modifications to a loan’s amount, if
different from the date of the
modification; and (3) the effective date
for all other modifications, if different
from the date of the modification.23
Industry commenters expressed a
variety of concerns regarding these
proposed fields, including that these
items of information extended beyond
the data elements specified in SEA Rule
10c–1a and increased the rule’s
complexity and implementation
burdens.24
In Partial Amendment No. 1, FINRA
is proposing to delete the originally
proposed settlement date- and effective
date-related requirements of proposed
Rules 6530(a)(2)(E) and 6530(b)(2)(F).25
FINRA believes it is appropriate, at this
time, to delete these requirements to
facilitate the achievement of the initial
implementation of SLATE reporting
requirements in a timely manner.
22 Firms may choose to append additional
modifiers and indicators to their SLATE reports
voluntarily, where available. FINRA would not
disseminate these voluntarily provided data points
to the public.
23 See Notice, supra note 3.
24 See Partial Amendment No. 1; see also,
Response to Comments, SR–FINRA–2024–007.
25 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. See supra note 20.
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4. Rebate Rates, Lending Fees, and
Other Fees or Charges
FINRA is proposing to amend the
Original Proposal to provide covered
persons with additional options
regarding the manner in which they
may report a rebate rate or lending fee
or rate. As originally proposed, covered
persons would have been required to
report loan rates as a percentage when
reporting to SLATE, even where such
rate was based on a spread to a
benchmark.26 Under this framework,
SEA Rule 10c–1a would require a
covered person to report a modification
to SLATE to update the loan’s rate
where there is a change to the
underlying benchmark rate.27 Some
commenters expressed concern that
reporting modifications to a loan rate
solely as a result of a change to the
underlying benchmark rate would
increase reporting costs and
implementation burdens.28
In Partial Amendment No. 1, FINRA
is proposing to adopt Rule 6530(a)(4)
(Reporting Loan Rates Based on a
Spread to a Benchmark or Reference
Rate,) to permit covered persons to—in
addition to reporting the rebate rate or
lending fee or rate for a covered
securities loan—also report the spread
and identity of the benchmark or
reference rate for covered securities
loans that are priced based on a spread
to a benchmark or reference rate.
Specifically, new proposed Rule
6530(a)(4)(B) provides that, where a
rebate rate or lending fee or rate is
determined based on a spread to a
benchmark or reference rate, a covered
person may report: (a) the rebate rate or
lending fee or rate as of the date the
covered securities loan was effected; (b)
the spread; and (c) the identity of the
benchmark or reference rate.
Alternatively, a covered person may
report only the rebate rate or lending fee
or rate.
FINRA believes that these proposed
amendments are appropriate to provide
covered persons the flexibility to report
to SLATE in a manner that is consistent
with their preference for whether or not
they must report modifications to the
rebate rate or lending fee or rate
described in SEA Rule 10c–1a(c)(8) or
(9) due to changes to the underlying
benchmark or reference rate.29 This
26 See
Notice, supra note 3.
Adopting Release, 88 FR 75644, 75672
(explaining that how an RNSA chooses to structure
the reporting of loan rates will determine whether
a covered person is required to report a
modification as a result of benchmark changes).
28 See Partial Amendment No. 1; see also,
Response to Comments, SR–FINRA–2024–007.
29 A covered person would continue to be
required to report a loan modification pursuant to
27 See
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flexibility should address commenters’
concern that covered persons would be
required to report loan rate
modifications when the rebate rate
changes solely as a result of a change to
the underlying benchmark rate (where
there is no change in the negotiated
spread or identity of the benchmark).30
Partial Amendment No. 1 would also
amend the Original Proposal’s
requirements to specify that other fees
or charges need not be reported where
the rebate rate or lending fee or rate
field is populated. As originally
proposed, covered persons would have
been required to report: (1) for a covered
securities loan collateralized by cash,
the rebate rate; (2) for a covered
securities loan not collateralized by
cash, the securities lending fee; and (3)
any other fees or charges.31 Some
commenters expressed concern that the
Original Proposal extended beyond the
data elements specified in SEA Rule
10c–1a by requiring the reporting of
other fees or charges (beyond a loan’s
pricing).32
Partial Amendment No. 1 would
remove the separate requirement in
proposed Rule 6530(a)(2)(K) to report
any other fees or charges and amend the
rebate rate and lending fee reporting
requirements in proposed Rule
6530(a)(2)(I) and (J), respectively, to
mirror the language in SEA Rule 10c–
1a(c)(8) and (9), respectively. Thus,
revised proposed Rule 6530(a)(2)(I)
(renumbered as (a)(2)(H)) would require
a covered person to report, ‘‘[f]or a
covered securities loan collateralized by
cash, the rebate rate or any other fee or
charges;’’ and revised proposed Rule
6530(a)(2)(J) (renumbered as (a)(2)(I))
would require a covered person to
report, ‘‘[f]or a covered securities loan
not collateralized by cash, the securities
lending fee or rate, or any other fee or
charges.’’
5. Covered Person Capacity and MPID
FINRA is proposing to amend the
Original Proposal to delete the
requirement that covered persons report
whether the covered person is the
lender, borrower or intermediary, which
was intended to help FINRA perform
data validations, in particular, when a
proposed Rule 6530(b)(2) in the event of a change
to the negotiated spread or to the identity of the
benchmark or reference rate. See Adopting Release,
88 FR 75644, 75672 (stating that if an RNSA
chooses to allow covered persons to report based on
a spread and a benchmark, then no modification
would be required to be reported unless there were
a change in the negotiated spread or benchmark).
30 See Partial Amendment No. 1; see also,
Response to Comments, SR–FINRA–2024–007.
31 See Notice, supra note 3.
32 See Partial Amendment No. 1; see also,
Response to Comments, SR–FINRA–2024–007.
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party other than the covered person
submitted the SLATE report.33 Some
commenters expressed concern that this
requirement extended beyond the data
elements specified in SEA Rule 10c–1a
and would increase the complexity of
the reporting requirements and
implementation burdens.34
In Partial Amendment No. 1, FINRA
is proposing to delete proposed Rules
6530(a)(2)(V) and 6530(b)(2)(G), which
both required reporting of whether the
covered person is the lender, borrower
or intermediary. FINRA believes that
this proposed amendment is appropriate
in that it simplifies the initial reporting
framework. FINRA believes that the file
submission process would provide
information sufficient to allow FINRA to
identify the submitting party and
therefore the ability to ascertain whether
a SLATE report is being submitted by
the covered person, a reporting agent, or
another party.
FINRA is also proposing to make a
conforming amendment to proposed
Rule 6530(a)(2) to require a covered
person to submit their market
participant identifier (‘‘MPID’’), if
known, when reporting an initial
covered securities loan, consistent with
the requirement in proposed Rule
6530(b)(2)(C) (renumbered as (b)(2)(B))
for loan modification reports, which
will identify in the audit trail the party
on whose behalf a SLATE report is
submitted.
6. Internal Loan Identifiers
FINRA is proposing to amend the
Original Proposal regarding the
requirement that covered persons report
unique internal loan identifiers. As
originally proposed, Rules 6530(a)(2)(W)
and 6530(b)(2)(A) would have required
covered persons to report the unique
internal identifier assigned to the
covered securities loan. With respect to
an allocation of an omnibus loan
effected pursuant to an agency lending
agreement, proposed Rules 6530(a)(2)(X)
and 6530(b)(2)(B) would have required
covered persons to report the unique
internal identifier for the associated
omnibus loan.35
FINRA proposed Rules 6530(a)(2)(W)
and 6530(b)(2)(A) to allow FINRA to
link related loan reports where a FINRA
identifier had not yet been assigned,
thereby improving the completeness of
audit trail data available to regulators
and the usefulness of the information
disseminated to the public. In the case
of proposed Rules 6530(a)(2)(X) and
33 See
Notice, supra note 3.
Partial Amendment No. 1; see also,
Response to Comments, SR–FINRA–2024–007.
35 See Notice, supra note 3.
34 See
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6530(b)(2)(B), FINRA intended to use
the reported information to identify
where multiple loan reports were
related to a single omnibus loan, thereby
providing additional clarity in the loan
activity statistics disseminated to the
public and to improve the completeness
of the audit trail available to regulators.
Some commenters expressed concerns
that the required internal loan and
omnibus loan identifiers extended
beyond the data elements specified in
SEA Rule 10c–1a and increased the
rule’s complexity and implementation
burdens.36
In Partial Amendment No. 1, FINRA
is proposing to amend Rule 6530(a)(2) to
streamline the requirement that a
unique identifier assigned by the
covered person to the loan must be
reported to SLATE. Specifically, revised
proposed Rule 6530(a)(2)(W)
(renumbered as (a)(2)(U)) would provide
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.37
With this amendment, FINRA is
narrowing the scope of the requirement
from the Original Proposal such that,
instead of applying to all initial covered
securities loan reports, the requirement
would be 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, under the amendment,
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.
This amendment is necessary to allow
FINRA to link same-day T+0 reports
that relate to the same covered securities
loan. Without a way to link such
reports, FINRA would be unable to
incorporate accurately modifications
36 See Partial Amendment No. 1; see also,
Response to Comments, SR–FINRA–2024–007.
37 A covered person may use an identifier that it
previously assigned for internal use or one that the
firm generated solely for the purpose of reporting
the loan to SLATE.
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into the daily loan statistics where
FINRA cannot identify the amount of
securities impacted by the modification.
For example, FINRA would be unable to
determine the information necessary to
incorporate the modification into the
volume information described in
proposed Rule 6540(c)(1). Therefore,
FINRA believes this amendment is
appropriate and necessary in that it
streamlines initial SLATE reporting
requirements while continuing to allow
FINRA to accurately record and
disseminate information on transactions
reported pursuant to SEA Rule 10c–1a.
FINRA is proposing to amend the
Original Proposal to delete the
requirements in proposed Rules
6530(a)(2)(X) and 6530(b)(2)(B) related
to the provision of a unique internal
identifier for an associated omnibus
loan. FINRA believes this amendment is
appropriate, at this time, to facilitate the
achievement of the initial SLATE
reporting requirements in a timely
manner.
7. Reporting Deadline
FINRA is proposing to amend the
Original Proposal to extend the deadline
for reporting initial covered securities
loans and loan modifications to SLATE.
As originally proposed, covered persons
would have been required to report loan
information to SLATE by 8:00:00 p.m.
Eastern Time (‘‘ET’’), with loans that
were effected or modified after 7:45:00
p.m. ET or 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 being reportable by
8:00:00 p.m. ET the next business day.38
Some commenters expressed concern
regarding the 7:45:00 p.m. ET loan cutoff time and 8:00:00 p.m. ET reporting
deadline, including that closing SLATE
at 8:00:00 p.m. ET would not capture
certain end-of-day activity, and that a
15-minute turnaround time (between
7:45:00 p.m. ET and 8:00:00 p.m. ET)
would make end-of-day processes
challenging.39
In Partial Amendment No. 1, FINRA
is proposing to amend proposed Rule
6530(a)(1) and (b)(1) to extend the
reporting deadline to 11:59:59 p.m. ET
and to change the reporting cut-off time
in proposed Rule 6530(a)(1) and (b)(1) to
7:00:00 p.m. ET. Partial Amendment No.
1 would also make a corresponding
change to the definition of ‘‘SLATE
system hours’’ in proposed Rule 6510(i)
(renumbered as (h)) to specify that the
SLATE system is open through 11:59:59
p.m. ET. FINRA believes that these
38 See
Notice, supra note 3.
Partial Amendment No. 1; see also,
Response to Comments, SR–FINRA–2024–007.
39 See
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proposed amendments to extend SLATE
system hours are appropriate to provide
additional time to process SLATE
submissions at the end of the day.
FINRA believes that the proposed
amendment to modify the loan cut-off
time from 7:45:00 p.m. ET to 7:00:00
p.m. ET would provide additional time
to report loans that are effected near the
end of the day, including time to
complete any necessary security set up
in SLATE.
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8. Reporting Agent Supervision
FINRA is proposing to amend the
Original Proposal to delete proposed
Rule 6530(d)(3). As originally proposed,
Rule 6530(d)(3) would have specified
that a member relying on a reporting
agent to report covered securities loan
information to SLATE has an obligation
under FINRA Rule 3110 (Supervision)
to take reasonable steps to ensure that
the reporting agent is complying with
SEA Rule 10c–1a and FINRA Rule 6530
on the member’s behalf.40 Two
commenters expressed concern with
this requirement,41 including that it
shifts back to the covered person the
reporting compliance burden
established by SEA Rule 10c–1a and
would create a reconciliation obligation
that would be time consuming, costly,
and operationally intensive.42
In Partial Amendment No. 1, FINRA
is deleting proposed Rule 6530(d)(3). In
its oversight of member compliance
with SEA Rule 10c–1a, in addition to
reviewing whether members have
complied with the requirements of SEA
Rule 10c–1a(a)(2) with respect to the use
of reporting agents, FINRA also will
review the timeliness and accuracy of
SLATE reports submitted by reporting
agents in light of a reporting agent’s
obligations under SEA Rule 10c–1a(b)
and the underlying requirements of SEA
Rule 10c–1a. After gaining experience
with the SLATE program, FINRA will
reevaluate whether any additional
measures are appropriate.
9. Loan Transaction Activity and Rate
Distribution Data
FINRA is proposing to amend the
Original Proposal to remove the
subcategories of volume data from the
aggregate loan transaction activity to be
disseminated. Under the Original
Proposal, in addition to the total
aggregate volume of securities subject to
an initial covered securities loan or
modification to the amount of reportable
securities loaned reported on the prior
40 See
Notice, supra note 3.
Partial Amendment No. 1; see also,
Response to Comments, SR–FINRA–2024–007.
42 See Partial Amendment No. 1; see also,
Response to Comments, SR–FINRA–2024–007.
business day, Rule 6540(c)(1)
paragraphs (A) through (E) would have
provided that FINRA would
disseminate, by the morning of the next
business day, aggregate loan transaction
activity, including information broken
down into several subcategories (e.g., by
borrower type or whether a loan is an
open or term loan).43 Some commenters
expressed concern regarding the
Original Proposal, including that the
level of data granularity exceeds the
discretion provided by the Commission
with respect to aggregate data, and that
bucketing data by borrower type, in
particular, may permit market
participants to discern individual loan
amounts that are subject to delayed
dissemination under SEA Rule 10c–
1a.44
In Partial Amendment No. 1, FINRA
is proposing to amend paragraph
(c)(1)(A) 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.
FINRA is proposing to delete paragraphs
(c)(1)(B) through (E). FINRA believes it
is appropriate, at this time, to revise the
Original Proposal as described and to
revisit the possibility of enhancing the
aggregate loan transaction activity in the
future after gaining experience with the
impact of disseminating volume data
and analyzing what additional
information could be useful while
continuing to be sensitive to potential
information leakage concerns. Any
future amendments to the dissemination
provisions would be subject to a
separate proposed rule change with the
Commission and subject to notice and
comment.
FINRA is also proposing to amend
proposed Rules 6540(a) and (b) to clarify
that FINRA will disseminate, as part of
the individual loan transaction data, the
unique identifier assigned by FINRA to
the covered securities loan for a loan
modification ‘‘if reported to SLATE or
otherwise identified by FINRA.’’ This
amendment is appropriate because a
covered person may be unable to report
a FINRA identifier for a loan
modification if the FINRA identifier was
not yet assigned by FINRA—e.g., in the
case of a same-day return or partial
return of shares, where the initial
covered securities loan and the
modification to the same loan are
reported to SLATE on T+0.
In addition, FINRA is proposing to
amend proposed Rule 6540(c)(2)(A) to
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10. De Minimis Loan Transaction
Activity
FINRA is proposing to amend the
Original Proposal to clarify the
operation of the de minimis exception
for aggregate loan transaction activity
and increase the de minimis threshold.
As originally proposed, Supplementary
Material .01 to proposed Rule 6540 (De
Minimis Loan Transaction Activity)
would have provided that FINRA may
omit from the aggregate loan activity
volume information for reportable
securities for which there were three or
fewer types of initial covered securities
loan and loan modification events
reported to SLATE in total on the prior
business day.46 Some commenters
expressed concern regarding the de
minimis provision, including that the
threshold of three or fewer loan or loan
modification events is insufficient to
effectively prevent information leakage
and that the application of the de
minimis exception should be mandatory
rather than discretionary.47
In Partial Amendment No. 1, FINRA
is proposing to amend Supplementary
Material .01 to clarify the operation of
the de minimis provision and increase
the threshold. Specifically, FINRA is
proposing to amend proposed Rule
6540.01 to clarify that FINRA’s
application of the de minimis threshold
will be non-discretionary and to provide
that FINRA will not include aggregate
volume information for a security unless
there were reports submitted to SLATE
on the prior business day for at least 10
distinct covered securities loans in the
reportable security (represented by
45 See
41 See
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provide that the loan rate distribution
statistics for loans collateralized by cash
will be bucketed by U.S. currency and
non-U.S. currency, as applicable. In the
Original Proposal, Rule 6540(c)(2)(A)
would have provided that FINRA would
disseminate the highest rebate rate,
lowest rebate rate, and volume weighted
average of the rebate rates reported for
initial covered securities loans
collateralized by cash and for loan
modifications collateralized by cash
(where the loan modification involved a
change to the rebate rate).45 The
proposed amendment is appropriate
because the currency used as collateral
will impact the rebate rate reported to
SLATE and, therefore, separating the
rate information by U.S. currency
collateral and non-U.S. currency
collateral will make the disseminated
information more useful.
43 See
Notice, supra note 3.
44 See Partial Amendment No. 1; see also,
Response to Comments, SR–FINRA–2024–007.
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Notice, supra note 3.
Notice, supra note 3.
47 See Partial Amendment No. 1; see also,
Response to Comments, SR–FINRA–2024–007.
46 See
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different FINRA-assigned unique loan
identifiers).48 Therefore, under
paragraph (c)(1), FINRA would not
disseminate aggregate volume
information in a reportable security
unless there were at least 10 unique
loans reported to SLATE in the security
on the prior business day.49
Following are the changes proposed
in Partial Amendment No. 1, with the
proposed changes in the original filing
shown as if adopted. Proposed new
language in Partial Amendment No. 1 is
italicized; proposed deletions in Partial
Amendment No. 1 are in brackets:
6000. Quotation, Order, and Transaction
Reporting Facilities
*
*
*
*
*
6500. Securities Lending and Transparency
Engine (Slate)
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6510. Definitions
For the purposes of this Rule 6500 Series,
the following terms have the following
meaning:
[(a) ‘‘Affiliate’’ means an entity that
controls, is controlled by or is under common
control with a Covered Person. For the
purposes of this definition, ‘‘control,’’ along
with any derivative thereof, means legal,
beneficial, or equitable ownership, directly or
indirectly, of 25 percent or more of the
capital stock (or other ownership interest, if
not a corporation) of any entity ordinarily
having voting rights. The term ‘‘common
control’’ means the same natural person or
entity controls two or more entities.]
(a)[(b)] ‘‘Confidential Data Element’’ means
an item of information that a Covered Person
must report under SEA Rule 10c–1a(e) and
FINRA Rule 6530(a)(2)(M)[(O)] through
(U)[(X)].
(b)[(c)] ‘‘Custodian’’ means a Broker or
Bank that is providing safekeeping or custody
services as described in Exchange Act
Section 3(a)(4)(B)(viii)(I)(aa) or (bb) in
connection with the Covered Securities Loan.
(c)[(d)] ‘‘Data Element’’ means an item of
information that a Covered Person must
report under SEA Rule 10c–1a(c) and FINRA
Rule 6530(a)(2)(A) through (L)[(N) and (Y)].
(d)[(e)] ‘‘Initial Covered Securities Loan’’
means a new Covered Securities Loan not
previously reported to SLATE.
(e)[(f)] ‘‘Loan Modification’’ means a
change to any Data Element with respect to
a Covered Securities Loan (irrespective of
whether such Covered Securities Loan was
previously reported to SLATE).
48 FINRA will not have insight into all of the
relevant loan details necessary to generate the
statistics described in proposed Rule 6540(c) with
respect to modifications to loans for which
reporting was not required pursuant to SEA Rule
10c–1a(c) at the time the loan was agreed to or last
modified (i.e., modifications reported to SLATE
pursuant to SEA Rule 10c–1a(d)(2)). Therefore, the
daily loan statistics that FINRA will publish will
only reflect modifications to covered securities
loans that were previously reported to SLATE.
49 This proposed provision is intended to address
potential information leakage in circumstances
where there are multiple reported events associated
with the same loan on a given day.
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(f)[(g)] ‘‘Securities Lending and
Transparency Engine’’ or ‘‘SLATE’’ means
the automated system developed by FINRA
that, among other things, accommodates
reporting and dissemination of loan reports
where applicable in Covered Securities
Loans.
(g)[(h)] ‘‘SLATE Participant’’ means any
person that reports securities loan
information to SLATE, directly or indirectly.
(h)[(i)] ‘‘SLATE System Hours’’ means the
hours SLATE is open, which are 6:00:00 a.m.
Eastern Time through 11:59:59[7:59:59] p.m.
Eastern Time on a business day, unless
otherwise announced by FINRA.
(i)[(j)] The following terms shall have the
meanings set forth in Exchange Act Section
3(a): ‘‘Bank,’’ ‘‘Broker,’’ ‘‘Dealer,’’ and
‘‘Clearing Agency.’’
(j)[(k)] The following terms shall have the
meanings set forth in SEA Rule 10c–1a:
‘‘Covered Person,’’ ‘‘Covered Securities
Loan,’’ ‘‘Reporting Agent,’’ and ‘‘Reportable
Security.’’
6520. Participation in SLATE
(a) No Change.
(b) Reporting Agents
A SLATE Participant acting as a Reporting
Agent shall provide FINRA with a list
naming each Covered Person on whose
behalf the Reporting Agent is providing
information to SLATE and shall provide
FINRA with any updates[changes] to the list
of such persons by the end of the day on
which any such change occurs, in the form
and manner specified by FINRA.
(c) No Change.
6530. Reporting Securities Loan Information
(a) Initial Covered Securities Loans
(1) When and How Initial Covered
Securities Loans Are Reported
For Initial Covered Securities Loans,
Covered Persons must report the information
specified in paragraph [Rule 6530](a)(2) of
this Rule to SLATE, as provided in this
paragraph (a)(1):
(A) An Initial Covered Securities Loan
effected on a business day at or after 12:00:00
a.m. Eastern Time through 7:00:00[7:45:00]
p.m. Eastern Time must be reported the same
day [before 8:00:00]by 11:59:59 p.m. Eastern
Time;
(B) An Initial Covered Securities Loan
effected on a business day after
7:00:00[7:45:00] p.m. Eastern Time must be
reported no later than the next business day
(T+1) [before 8:00:00]by 11:59:59 p.m.
Eastern Time; or
(C) An Initial Covered Securities Loan
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 Eastern Time) must be
reported the next business day (T+1) [before
8:00:00]by 11:59:59 p.m. Eastern Time.
(2) Loan Information To Be Reported
For Initial Covered Securities Loans, each
SLATE report shall contain the following
information:
(A) No Change.
(B) Security symbol, CUSIP, ISIN, or FIGI,
or other security identifier[if any];
(C) through (D) No Change.
[(E) The expected settlement date of the
Covered Securities Loan;]
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92233
(E)[(F)] The name of the platform or venue
where the Covered Securities Loan was
effected;
(F)[(G)] The amount of the Reportable
Securities loaned;
(G)[(H)] The type of collateral used to
secure the Covered Securities Loan;
(H)[(I)] For a Covered Securities Loan
collateralized by cash, the rebate rate or any
other fee or charges;
(I)[(J)] For a Covered Securities Loan not
collateralized by cash, the securities lending
fee or rate, or any other fee or charges;
[(K) Any other fees or charges;]
(J)[(L)] The percentage of collateral to value
of Reportable Securities loaned required to
secure such Covered Securities Loan;
(K)[(M)] [For a Covered Securities Loan
with a specified term, t]The termination date
of the Covered Securities Loan;
(L)[(N)] 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;
(M) If known, the MPID of the Covered
Person;
(N)[(O)] 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)[(P)] If known, the CRD Number or
Investment Adviser Registration Depository
Number of each party to the Covered
Securities Loan[, if applicable];
(P)[(Q)] If known, the MPID of each party
to the Covered Securities Loan;
(Q)[(R)] If known, the LEI of each party to
the Covered Securities Loan;
(R)[(S)] 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)[(T)] 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 a[the] customer of such Broker
or Dealer;
(T)[(U)] 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
[(V) Whether the Covered Person is the
lender, borrower or intermediary;]
(U)[(W)] 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 [The] unique
[internal] identifier assigned to the Covered
Securities Loan by the Covered Person
responsible for reporting the loan to
SLATE.[;]
[(X) 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; and]
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[(Y) Such modifiers and indicators as
required by either the Rule 6500 Series or the
SLATE Participant specification.]
(3) No Change.
(4) Reporting Loan Rates Based on a
Spread to a Benchmark or Reference Rate
(A) Report the rebate rate or lending fee or
rate; or
(B) Report:
(i) the rebate rate or lending fee or rate as
of the date the Covered Securities Loan was
effected;
(ii) the spread; and
(iii) the identity of the benchmark or
reference rate.
(b) Covered Securities Loan Modifications
(1) When and How Loan Modifications Are
Reported
For Loan Modifications, Covered Persons
must report the information specified in
paragraph (b)(2) of this Rule to SLATE, as
provided in this paragraph (b)(1):
(A) A Loan Modification effected on a
business day at or after 12:00:00 a.m. Eastern
Time through 7:00:00[7:45:00] p.m. Eastern
Time must be reported the same day [before
8:00:00]by 11:59:59 p.m. Eastern Time;
(B) A Loan Modification effected on a
business day after 7:00:00[7:45:00] p.m.
Eastern Time must be reported no later than
the next business day (T+1) [before
8:00:00]by 11:59:59 p.m. Eastern Time; or
(C) A Loan Modification 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 Eastern Time) must be reported the
next business day (T+1) [before 8:00:00]by
11:59:59 p.m. Eastern Time.
(2) Loan Modifications—Information To Be
Reported
For Loan Modifications, each SLATE
report shall contain the following
information:
(A) The unique identifier assigned by
FINRA to the Initial Covered Securities Loan,
or[, if] where a Covered Person’s daily
submission includes two or more reports
related to the same Covered Securities Loan
and FINRA [a unique identifier] has not yet
[been] assigned a unique identifier to the
Covered Securities Loan[by FINRA], the
[unique internal] identifier reported pursuant
to paragraph (a)(2)(U) of this Rule [assigned
to the Covered Securities Loan by the
Covered Person responsible for reporting the
loan to SLATE];
[(B) 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;]
(B)[(C)] If known, t[T]he MPID of the
Covered Person;
(C)[(D)] The date of the Loan Modification;
(D)[(E)] The time of the Loan Modification;
and
[(F) 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);]
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18:02 Nov 20, 2024
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[(G) Whether the Covered Person is the
lender, borrower or intermediary;]
(E)(i)[(H)] If the Loan Modification occurs
after the Data Elements for such Covered
Securities Loan are reported to SLATE, and
results in a change to information previously
required to be reported to SLATE, the specific
modification and the specific Data Elements
being modified, or
(ii) If the Loan Modification is to a Covered
Securities Loan for which reporting to SLATE
was not required on the date the loan was
agreed to or last modified and results in a
change to any of the Data Elements, all Data
Elements as of the date of modification and
an identifier described in paragraph (a)(2)(U)
of this Rule.[The modified Data Elements for
a Loan Modification to a Covered Securities
Loan previously reported to SLATE or all
Data Elements for a Loan Modification to a
Covered Securities Loan that was not
previously required to be reported to SLATE;
and]
[(I) Such modifiers and indicators as
required by either the Rule 6500 Series or the
SLATE Participant specification.]
[(c) Modifiers and Indicators]
[Append the applicable modifiers or
indicators as specified by FINRA to all
SLATE reports.]
[(1) Exclusive Arrangement
If the Covered Securities Loan is made
pursuant to an exclusive arrangement with
the borrower or intermediary, select the
appropriate indicator.]
[(2) Loan to Affiliate
If the Covered Securities Loan is made to
an Affiliate of the lender or intermediary,
select the appropriate indicator.]
[(3) Unsettled Loan
If an Initial Covered Securities Loan or a
modification to the amount of Reportable
Securities loaned did not settle by the close
of SLATE System Hours on the expected
settlement date, select the appropriate
indicator.]
[(4) Terminated Loan
If a Covered Securities Loan has been
terminated, select the appropriate indicator.]
[(5) Rate or Fee Adjustment
(A) If a loan rebate rate or lending fee
accounts for a billing adjustment or
correction to amounts previously rebated or
charged, select the appropriate modifier; or
(B) If a loan rebate rate or lending fee
accounts for the value of a distribution or
other economic benefit associated with the
Reportable Security, e.g., a corporate action,
select the appropriate modifier.]
[(6) Basket Loan
If a loan rebate rate or lending fee reflects
a rate or fee involving a basket of at least 10
unique Reportable Securities for a single
agreed rate or fee for the entire basket, select
the appropriate modifier.]
(c)[(d)] Compliance With Reporting
Obligations
(1) No Change.
(2) No Change.
[(3) A member relying on a Reporting
Agent to report Covered Securities Loan
information to SLATE has an obligation
under FINRA Rule 3110 to take reasonable
steps to ensure that the Reporting Agent is
complying with SEA Rule 10c–1a and FINRA
Rule 6530 on its behalf.]
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(3)[(4)] If a Covered Person makes a good
faith determination that it has a reporting
obligation under SEA Rule 10c–1a [and this
Rule 6500 Series], the Covered Person or
Reporting Agent, as applicable, must report
the Covered Securities Loan as provided in
this Rule, and if the Reportable Security is
not entered into the SLATE system, the
Covered Person or Reporting Agent, as
applicable, must promptly notify and provide
FINRA Operations, in the form and manner
required by FINRA, the information specified
in Rule 6530(a)(2)(A) and (B), along with
such other information as FINRA deems
necessary to enter the Reportable Security for
reporting through SLATE.
[• • • Supplementary Material: ----------]
[.01 Intraday Loan Modifications. If a
Covered Securities Loan previously reported
to SLATE or a Covered Securities Loan not
previously reported to SLATE is modified
multiple times throughout the day, a Covered
Person must report each Loan Modification
as set forth in Rule 6530(b).]
[.02 Changes to the Parties to a Covered
Securities Loan. With respect to a previously
reported Covered Securities Loan, following
the addition or removal of a party required
to be identified pursuant to Rule
6530(a)(2)(O), a Covered Person must: (a)
report the termination of the previously
reported Covered Securities Loan as a Loan
Modification pursuant to Rule 6530(b) that
reflects the date and time the party was
added or removed and select the Terminated
Loan indicator; and (b) report an Initial
Covered Securities Loan pursuant to Rule
6530(a) that reflects the new parties to the
loan, if known (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)).]
6540. Dissemination of Loan Information
(a) Next Day Dissemination
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
will 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)[(2)] the security identifier(s) specified
in Rule 6530(a)(2)(A) or (B) that FINRA
determines is appropriate to disseminate; and
(4)[(3)](A) for each Initial Covered
Securities Loan, all other Data Elements
reported to SLATE, except the amount of
Reportable Securities loaned [and as
otherwise provided for in paragraph (d) of
this Rule]; or
(B) for each Loan Modification reported
pursuant to Rule 6530(b)(2)(E)(i)[to a Covered
Securities Loan], the modified Data Elements
reported to SLATE, except the amount of
Reportable Securities loaned [and as
otherwise provided for in paragraph (d) of
this Rule]; or
(C) for each Loan Modification reported
pursuant to Rule 6530(b)(2)(E)(ii)[to a
Covered Securities Loan that was not
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lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 89, No. 225 / Thursday, November 21, 2024 / Notices
previously required to be reported to
SLATE], all other Data Elements reported to
SLATE, except the amount of Reportable
Securities loaned [and as otherwise provided
for in paragraph (d) of this Rule].
(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
will 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)[(2)] the security identifier(s) specified
in Rule 6530(a)(2)(A) or (B) that FINRA
determines is appropriate to disseminate; and
(4)[(3)] the amount of Reportable Securities
loaned reported to SLATE.
(c) Daily Loan Statistics
(1) Aggregate Loan Transaction Activity
For each Reportable Security for which an
Initial Covered Securities Loan or Loan
Modification is reported to SLATE on a given
business day, no later than the morning of
the next business day, FINRA will
disseminate the security identifier specified
in Rule 6530(a)(2)(A) or (B) that FINRA
determines is appropriate to disseminate and
the [aggregate loan activity in the Reportable
Security, including the:
(A) ]aggregate volume of securities [(both
in total and by collateral type)] subject to an
Initial Covered Securities Loan or
modification to the amount of Reportable
Securities loaned, reported on the prior
business day.[;]
[(B) aggregate volume of securities (both in
total and by collateral type) subject to a
rebate rate or fee modification, reported on
the prior business day;]
[(C) aggregate volume of securities subject
to an Initial Covered Securities Loan or
modification to the amount of Reportable
Securities loaned with a specified term, and
subject to an Initial Covered Securities Loan
or modification to the amount of Reportable
Securities loaned without a specified term,
reported on the prior business day;]
[(D) 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]
[(E) the total number of Initial Covered
Securities Loans and terminated Covered
Security Loans (both in total and by collateral
type) reported on the prior business day.]
(2) Loan Rate Distribution Data
For each Reportable Security for which an
Initial Covered Securities Loan or Loan
Modification is reported to SLATE on a given
business day, no later than the morning of
the next business day, FINRA will
disseminate 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 and lending fees or rates, as applicable,
including:
VerDate Sep<11>2014
18:02 Nov 20, 2024
Jkt 265001
(A) 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 for Initial
Covered Securities Loans collateralized by
cash and for Loan Modifications
collateralized by cash (where the Loan
Modification involved a change to the rebate
rate); and
(B) 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 for Loan
Modifications not collateralized by cash
(where the Loan Modification involved a
change to the lending fee or rate).
(d) Loan Transaction Information Not
Disseminated
FINRA will not disseminate[:
(1)] any Confidential Data Elements
reported to SLATE[; and
(2) any modifier or indicator required by
either the Rule 6500 Series or the SLATE
Participant specification that FINRA
determines shall not be publicly
disseminated
• • • Supplementary Material: ---------.01 De Minimis Loan Transaction Activity.
Notwithstanding paragraph (c)(1) of this
Rule, FINRA will not include [may omit from
the aggregate loan activity] aggregate volume
information for a Reportable Security[ies]
[for] unless [which] there were reports
submitted to SLATE on the prior business
day for at least ten distinct Covered
Securities Loans in the Reportable Security
(represented by different FINRA-assigned
unique loan identifiers) [there were three or
fewer types of Initial Covered Securities Loan
and Loan Modification events reported to
SLATE in total on the prior business day].
.02 No Change.
6550. Emergency Authority
No Change.
*
*
*
*
*
III. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change, as amended by Partial
Amendment No. 1, is consistent with
the Act. Comments may be submitted by
any of the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
FINRA–2024–007 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–FINRA–2024–007. This file
PO 00000
Frm 00150
Fmt 4703
Sfmt 4703
92235
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of
FINRA. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to File
Number SR–FINRA–2024–007 and
should be submitted on or before
December 6, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.50
Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2024–27223 Filed 11–20–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–101634; File No. SR–
CBOE–2024–050]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Its Fees
Schedule
November 15, 2024.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on November
1, 2024, Cboe Exchange, Inc. (the
50 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\21NON1.SGM
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Agencies
[Federal Register Volume 89, Number 225 (Thursday, November 21, 2024)]
[Notices]
[Pages 92228-92235]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27223]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101645; File No. SR-FINRA-2024-007]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Partial Amendment No. 1 to Proposed Rule
Change To Adopt the FINRA Rule 6500 Series (Securities Lending and
Transparency Engine (SLATETM))
November 15, 2024.
I. Introduction
On May 1, 2024, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'' or ``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change (SR-FINRA-2024-007) to adopt the
new FINRA Rule 6500 Series (Securities Lending and Transparency Engine
(SLATETM)) to (1) require reporting of securities loans; and
(2) provide for the public dissemination of loan information. The
proposed rule change was published for comment in the Federal Register
on May 7, 2024.\3\
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 100046 (May 1,
2024), 89 FR 38203 (May 7, 2024) (``Notice''). Comments received on
the proposed rule change are available at: https://www.sec.gov/comments/sr-finra-2024-007/srfinra2024007.htm.
---------------------------------------------------------------------------
On June 10, 2024, pursuant to Section 19(b)(2) of the Act,\4\ the
Commission designated a longer period within which to approve the
proposed rule change, disapprove the proposed rule change, or institute
proceedings to determine whether to disapprove the proposed rule
change.\5\ On August 5, 2024, the Commission instituted proceedings
under Section 19(b)(2)(B) of the Act \6\ to
[[Page 92229]]
determine whether to approve or disapprove the proposed rule change.\7\
On October 28, 2024, the Commission, pursuant to Section 19(b)(2) of
the Act,\8\ designated January 2, 2025, as the date by which the
Commission shall either approve or disapprove the proposed rule
change.\9\ On November 14, 2024, FINRA responded to comments \10\ and
filed a partial amendment to the proposed rule change in response to
certain comments on the proposed rule change (``Partial Amendment No.
1''). Partial Amendment No. 1 is described in Item II below, which has
been substantially prepared by FINRA.\11\ The Commission is publishing
this notice to solicit comments on Partial Amendment No. 1 from
interested persons.\12\
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 100305 (June 10,
2024), 89 FR 50644 (June 14, 2024). The Commission designated August
5, 2024, as the date by which the Commission shall approve or
disapprove, or institute proceedings to determine whether to
disapprove, the proposed rule change.
\6\ 15 U.S.C. 78s(b)(2)(B).
\7\ See Securities Exchange Act Release No. 100655 (August 5,
2024), 89 FR 65441 (August 9, 2024).
\8\ 15 U.S.C. 78s(b)(2).
\9\ See Securities Exchange Act Release No. 101450 (October 28,
2024), 89 FR 87448 (November 1, 2024).
\10\ See Letter from Racquel L. Russell, Senior Vice President,
Director of Capital Markets Policy, Office of General Counsel,
FINRA, dated November 14, 2024 (responding to comments regarding
File No. SR-FINRA-2024-007) (``Response to Comments, SR-FINRA-2024-
007'').
\11\ The Commission has reformatted FINRA's presentation of its
proposed modifications to, and descriptions of, the proposed rule
change.
\12\ Partial Amendment No. 1 is also available on FINRA's
website at https://www.finra.org/rules-guidance/rule-filings/sr-finra-2024-007.
---------------------------------------------------------------------------
II. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Partial Amendment
FINRA is proposing the following amendments to the filing: \13\
---------------------------------------------------------------------------
\13\ In addition to the amendments described below, FINRA has
made conforming changes to proposed Rule 6510 and proposed Rule
6540(d). FINRA has also made textual changes to better align with
the language of SEA Rule 10c-1a.
---------------------------------------------------------------------------
1. Reporting Intraday Loan Modifications and Changes to the Parties to
a Loan
FINRA is proposing to amend the Original Proposal to delete the
supplementary material regarding the reporting of intraday loans
(Supplementary Material .01 (Intraday Loan Modifications)) and changes
to the parties to a loan, including in the context of reallocating
omnibus loans (Supplementary Material .02 (Changes to the Parties to a
Covered Securities Loan)). As originally proposed, Rule 6530.01
provided that, if a covered securities loan \14\ is modified multiple
times throughout the day, a covered person must report each loan
modification as set forth in proposed Rule 6530(b). Some commenters
objected to Supplementary Material .01, stating that it was
inconsistent with SEA Rule 10c-1a, that intraday reporting was not
required and that only end-of-day reporting was mandated under the
Commission's rule.\15\ As originally proposed, Rule 6530.02 generally
provided that, following the addition or removal of a party required to
be identified pursuant to Rule 6530(a)(2)(O), a covered person must
report the termination of the previously reported loan and report an
initial loan reflecting the new parties to the loan, if known. One
commenter asserted that proposed Rule 6530.02 contradicts a decision by
the Commission not to treat reallocations among a pooled loan's
underlying constituents as a new covered securities loan or as a loan
modification.\16\
---------------------------------------------------------------------------
\14\ See 17 CFR 240.10c-1a (``SEA Rule 10c-1a'') and proposed
FINRA Rule 6510 for definitions of the terms ``covered securities
loan,'' ``covered person,'' and ``reporting agent'' as used
throughout Partial Amendment No. 1. See proposed FINRA Rule 6510 for
definitions of the terms ``initial covered securities loan'' and
``loan modification'' as used throughout Partial Amendment No. 1.
\15\ See Partial Amendment No. 1; see also, Response to
Comments, SR-FINRA-2024-007.
\16\ See Partial Amendment No. 1; see also, Response to
Comments, SR-FINRA-2024-007.
---------------------------------------------------------------------------
In Partial Amendment No. 1, FINRA is proposing to amend the
Original Proposal to delete both Supplementary Material .01 and .02.
Proposed Rule 6530 is not intended to alter when loan events are
required to be reported as loan modifications (including terminations)
under SEA Rule 10c-1a or when new loans must be reported under SEA Rule
10c-1a. Thus, under FINRA's proposed rule, covered persons must report
modifications consistent with the Commission's rule and as described in
the SEA Rule 10c-1a adopting release.\17\ Similarly, covered persons
must report reallocations of loans in a manner consistent with SEA Rule
10c-1a and the Adopting Release. To the extent a loan event is not
reportable under SEA Rule 10c-1a, there would likewise be no SLATE
reporting obligations.
---------------------------------------------------------------------------
\17\ Securities Exchange Act Release No. 98737 (October 13,
2023), 88 FR 75644 (November 3, 2023) (Reporting of Securities
Loans) (``Adopting Release'').
---------------------------------------------------------------------------
2. Modifiers and Indicators
FINRA is proposing to amend the Original Proposal to delete the
proposed modifier and indicator requirements. As originally proposed,
covered persons would have been required to append specific modifiers
and indicators when reporting initial covered securities loans and loan
modifications to SLATE. Specifically, proposed Rule 6530(c) (Modifiers
and Indicators) would have required a covered person to identify (1)
exclusive arrangements, (2) loans to affiliates, (3) unsettled loans,
(4) terminated loans, (5) rate or fee adjustments, and (6) basket
loans. FINRA originally proposed these modifiers and indicators to
provide regulators and the public with important information, including
where the reported rates may not reflect current market rates, and to
enhance the disseminated data and its value to market participants and
better inform the reported rates validation process.\18\ Industry
commenters expressed a variety of concerns regarding the proposed
modifiers and indicators, including that these items of information
extended beyond the data elements specified in SEA Rule 10c-1a,
increased the rule's complexity and implementation burdens, and may
raise information leakage concerns.\19\
---------------------------------------------------------------------------
\18\ See Notice, 89 FR 38203, 38208.
\19\ See Partial Amendment No. 1; see also, Response to
Comments, SR-FINRA-2024-007.
---------------------------------------------------------------------------
In Partial Amendment No. 1, FINRA is proposing to amend the
Original Proposal to delete the modifier and indicator requirements.
Specifically, Partial Amendment No. 1 would delete Rule 6530(c) to
remove the specific requirements related to modifiers and indicators to
identify (1) exclusive arrangements, (2) loans to affiliates, (3)
unsettled loans, (4) terminated loans,\20\ (5) rate or fee adjustments,
and (6) basket loans.\21\
---------------------------------------------------------------------------
\20\ While FINRA is proposing to delete 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 SEA Rule 10c-
1a(c)(11). When reporting an initial covered securities loan to
SLATE that is an open loan, a covered person would be required to
leave the termination 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.
Upon the termination of either an open or a term loan, a covered
person would be required to submit a loan modification 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 generally, Adopting Release, 88 FR 75644, 75672
n.426.
\21\ While Partial Amendment No. 1 removes several of the
originally proposed fields and the proposed indicators and modifiers
to facilitate a timely initial implementation of SLATE, the absence
of these elements may impact the quality and completeness of the
resultant SLATE data. After gaining experience with the operation of
SLATE and the initial data set, FINRA will reevaluate whether any
future enhancements to the SLATE reporting requirements are
appropriate, including to improve the quality and completeness of
SLATE data. Any such efforts would be subject to a separate proposed
rule change with the Commission and subject to notice and comment.
---------------------------------------------------------------------------
FINRA also proposes to delete the requirements in proposed Rule
6530(a)(2)(Y) and proposed Rule 6530(b)(2)(I), which state that covered
persons must report the modifiers and
[[Page 92230]]
indicators as required by either the Rule 6500 Series or the SLATE
participant specification. Partial Amendment No. 1 also would amend
proposed Rule 6510 (Definitions) to remove the definition of the term
``affiliate,'' as it is no longer needed given the deletion of the
related indicator. FINRA believes it is appropriate, at this time, to
delete these aspects of the Original Proposal to facilitate the
achievement of the initial SLATE reporting requirements in a timely
manner.\22\
---------------------------------------------------------------------------
\22\ Firms may choose to append additional modifiers and
indicators to their SLATE reports voluntarily, where available.
FINRA would not disseminate these voluntarily provided data points
to the public.
---------------------------------------------------------------------------
3. Settlement Date and Effective Date
FINRA is proposing to amend the Original Proposal to remove the
requirements that covered persons report the settlement date and
effective date in covered securities loan reports. As originally
proposed, covered persons would have been required to report: (1) the
expected settlement date for initial covered securities loans; (2) the
expected settlement date for modifications to a loan's amount, if
different from the date of the modification; and (3) the effective date
for all other modifications, if different from the date of the
modification.\23\ Industry commenters expressed a variety of concerns
regarding these proposed fields, including that these items of
information extended beyond the data elements specified in SEA Rule
10c-1a and increased the rule's complexity and implementation
burdens.\24\
---------------------------------------------------------------------------
\23\ See Notice, supra note 3.
\24\ See Partial Amendment No. 1; see also, Response to
Comments, SR-FINRA-2024-007.
---------------------------------------------------------------------------
In Partial Amendment No. 1, FINRA is proposing to delete the
originally proposed settlement date- and effective date-related
requirements of proposed Rules 6530(a)(2)(E) and 6530(b)(2)(F).\25\
FINRA believes it is appropriate, at this time, to delete these
requirements to facilitate the achievement of the initial
implementation of SLATE reporting requirements in a timely manner.
---------------------------------------------------------------------------
\25\ 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. See supra note
20.
---------------------------------------------------------------------------
4. Rebate Rates, Lending Fees, and Other Fees or Charges
FINRA is proposing to amend the Original Proposal to provide
covered persons with additional options regarding the manner in which
they may report a rebate rate or lending fee or rate. As originally
proposed, covered persons would have been required to report loan rates
as a percentage when reporting to SLATE, even where such rate was based
on a spread to a benchmark.\26\ Under this framework, SEA Rule 10c-1a
would require a covered person to report a modification to SLATE to
update the loan's rate where there is a change to the underlying
benchmark rate.\27\ Some commenters expressed concern that reporting
modifications to a loan rate solely as a result of a change to the
underlying benchmark rate would increase reporting costs and
implementation burdens.\28\
---------------------------------------------------------------------------
\26\ See Notice, supra note 3.
\27\ See Adopting Release, 88 FR 75644, 75672 (explaining that
how an RNSA chooses to structure the reporting of loan rates will
determine whether a covered person is required to report a
modification as a result of benchmark changes).
\28\ See Partial Amendment No. 1; see also, Response to
Comments, SR-FINRA-2024-007.
---------------------------------------------------------------------------
In Partial Amendment No. 1, FINRA is proposing to adopt Rule
6530(a)(4) (Reporting Loan Rates Based on a Spread to a Benchmark or
Reference Rate,) to permit covered persons to--in addition to reporting
the rebate rate or lending fee or rate for a covered securities loan--
also report the spread and identity of the benchmark or reference rate
for covered securities loans that are priced based on a spread to a
benchmark or reference rate. Specifically, new proposed Rule
6530(a)(4)(B) provides that, where a rebate rate or lending fee or rate
is determined based on a spread to a benchmark or reference rate, a
covered person may report: (a) the rebate rate or lending fee or rate
as of the date the covered securities loan was effected; (b) the
spread; and (c) the identity of the benchmark or reference rate.
Alternatively, a covered person may report only the rebate rate or
lending fee or rate.
FINRA believes that these proposed amendments are appropriate to
provide covered persons the flexibility to report to SLATE in a manner
that is consistent with their preference for whether or not they must
report modifications to the rebate rate or lending fee or rate
described in SEA Rule 10c-1a(c)(8) or (9) due to changes to the
underlying benchmark or reference rate.\29\ This flexibility should
address commenters' concern that covered persons would be required to
report loan rate modifications when the rebate rate changes solely as a
result of a change to the underlying benchmark rate (where there is no
change in the negotiated spread or identity of the benchmark).\30\
---------------------------------------------------------------------------
\29\ A covered person would continue to be required to report a
loan modification pursuant to proposed Rule 6530(b)(2) in the event
of a change to the negotiated spread or to the identity of the
benchmark or reference rate. See Adopting Release, 88 FR 75644,
75672 (stating that if an RNSA chooses to allow covered persons to
report based on a spread and a benchmark, then no modification would
be required to be reported unless there were a change in the
negotiated spread or benchmark).
\30\ See Partial Amendment No. 1; see also, Response to
Comments, SR-FINRA-2024-007.
---------------------------------------------------------------------------
Partial Amendment No. 1 would also amend the Original Proposal's
requirements to specify that other fees or charges need not be reported
where the rebate rate or lending fee or rate field is populated. As
originally proposed, covered persons would have been required to
report: (1) for a covered securities loan collateralized by cash, the
rebate rate; (2) for a covered securities loan not collateralized by
cash, the securities lending fee; and (3) any other fees or
charges.\31\ Some commenters expressed concern that the Original
Proposal extended beyond the data elements specified in SEA Rule 10c-1a
by requiring the reporting of other fees or charges (beyond a loan's
pricing).\32\
---------------------------------------------------------------------------
\31\ See Notice, supra note 3.
\32\ See Partial Amendment No. 1; see also, Response to
Comments, SR-FINRA-2024-007.
---------------------------------------------------------------------------
Partial Amendment No. 1 would remove the separate requirement in
proposed Rule 6530(a)(2)(K) to report any other fees or charges and
amend the rebate rate and lending fee reporting requirements in
proposed Rule 6530(a)(2)(I) and (J), respectively, to mirror the
language in SEA Rule 10c-1a(c)(8) and (9), respectively. Thus, revised
proposed Rule 6530(a)(2)(I) (renumbered as (a)(2)(H)) would require a
covered person to report, ``[f]or a covered securities loan
collateralized by cash, the rebate rate or any other fee or charges;''
and revised proposed Rule 6530(a)(2)(J) (renumbered as (a)(2)(I)) would
require a covered person to report, ``[f]or a covered securities loan
not collateralized by cash, the securities lending fee or rate, or any
other fee or charges.''
5. Covered Person Capacity and MPID
FINRA is proposing to amend the Original Proposal to delete the
requirement that covered persons report whether the covered person is
the lender, borrower or intermediary, which was intended to help FINRA
perform data validations, in particular, when a
[[Page 92231]]
party other than the covered person submitted the SLATE report.\33\
Some commenters expressed concern that this requirement extended beyond
the data elements specified in SEA Rule 10c-1a and would increase the
complexity of the reporting requirements and implementation
burdens.\34\
---------------------------------------------------------------------------
\33\ See Notice, supra note 3.
\34\ See Partial Amendment No. 1; see also, Response to
Comments, SR-FINRA-2024-007.
---------------------------------------------------------------------------
In Partial Amendment No. 1, FINRA is proposing to delete proposed
Rules 6530(a)(2)(V) and 6530(b)(2)(G), which both required reporting of
whether the covered person is the lender, borrower or intermediary.
FINRA believes that this proposed amendment is appropriate in that it
simplifies the initial reporting framework. FINRA believes that the
file submission process would provide information sufficient to allow
FINRA to identify the submitting party and therefore the ability to
ascertain whether a SLATE report is being submitted by the covered
person, a reporting agent, or another party.
FINRA is also proposing to make a conforming amendment to proposed
Rule 6530(a)(2) to require a covered person to submit their market
participant identifier (``MPID''), if known, when reporting an initial
covered securities loan, consistent with the requirement in proposed
Rule 6530(b)(2)(C) (renumbered as (b)(2)(B)) for loan modification
reports, which will identify in the audit trail the party on whose
behalf a SLATE report is submitted.
6. Internal Loan Identifiers
FINRA is proposing to amend the Original Proposal regarding the
requirement that covered persons report unique internal loan
identifiers. As originally proposed, Rules 6530(a)(2)(W) and
6530(b)(2)(A) would have required covered persons to report the unique
internal identifier assigned to the covered securities loan. With
respect to an allocation of an omnibus loan effected pursuant to an
agency lending agreement, proposed Rules 6530(a)(2)(X) and
6530(b)(2)(B) would have required covered persons to report the unique
internal identifier for the associated omnibus loan.\35\
---------------------------------------------------------------------------
\35\ See Notice, supra note 3.
---------------------------------------------------------------------------
FINRA proposed Rules 6530(a)(2)(W) and 6530(b)(2)(A) to allow FINRA
to link related loan reports where a FINRA identifier had not yet been
assigned, thereby improving the completeness of audit trail data
available to regulators and the usefulness of the information
disseminated to the public. In the case of proposed Rules 6530(a)(2)(X)
and 6530(b)(2)(B), FINRA intended to use the reported information to
identify where multiple loan reports were related to a single omnibus
loan, thereby providing additional clarity in the loan activity
statistics disseminated to the public and to improve the completeness
of the audit trail available to regulators. Some commenters expressed
concerns that the required internal loan and omnibus loan identifiers
extended beyond the data elements specified in SEA Rule 10c-1a and
increased the rule's complexity and implementation burdens.\36\
---------------------------------------------------------------------------
\36\ See Partial Amendment No. 1; see also, Response to
Comments, SR-FINRA-2024-007.
---------------------------------------------------------------------------
In Partial Amendment No. 1, FINRA is proposing to amend Rule
6530(a)(2) to streamline the requirement that a unique identifier
assigned by the covered person to the loan must be reported to SLATE.
Specifically, revised proposed Rule 6530(a)(2)(W) (renumbered as
(a)(2)(U)) would provide 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.\37\
---------------------------------------------------------------------------
\37\ A covered person may use an identifier that it previously
assigned for internal use or one that the firm generated solely for
the purpose of reporting the loan to SLATE.
---------------------------------------------------------------------------
With this amendment, FINRA is narrowing the scope of the
requirement from the Original Proposal such that, instead of applying
to all initial covered securities loan reports, the requirement would
be 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, under the amendment, 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.
This amendment is necessary to allow FINRA to link same-day T+0
reports that relate to the same covered securities loan. Without a way
to link such reports, FINRA would be unable to incorporate accurately
modifications into the daily loan statistics where FINRA cannot
identify the amount of securities impacted by the modification. For
example, FINRA would be unable to determine the information necessary
to incorporate the modification into the volume information described
in proposed Rule 6540(c)(1). Therefore, FINRA believes this amendment
is appropriate and necessary in that it streamlines initial SLATE
reporting requirements while continuing to allow FINRA to accurately
record and disseminate information on transactions reported pursuant to
SEA Rule 10c-1a.
FINRA is proposing to amend the Original Proposal to delete the
requirements in proposed Rules 6530(a)(2)(X) and 6530(b)(2)(B) related
to the provision of a unique internal identifier for an associated
omnibus loan. FINRA believes this amendment is appropriate, at this
time, to facilitate the achievement of the initial SLATE reporting
requirements in a timely manner.
7. Reporting Deadline
FINRA is proposing to amend the Original Proposal to extend the
deadline for reporting initial covered securities loans and loan
modifications to SLATE. As originally proposed, covered persons would
have been required to report loan information to SLATE by 8:00:00 p.m.
Eastern Time (``ET''), with loans that were effected or modified after
7:45:00 p.m. ET or 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 being reportable by 8:00:00 p.m. ET the next business day.\38\ Some
commenters expressed concern regarding the 7:45:00 p.m. ET loan cut-off
time and 8:00:00 p.m. ET reporting deadline, including that closing
SLATE at 8:00:00 p.m. ET would not capture certain end-of-day activity,
and that a 15-minute turnaround time (between 7:45:00 p.m. ET and
8:00:00 p.m. ET) would make end-of-day processes challenging.\39\
---------------------------------------------------------------------------
\38\ See Notice, supra note 3.
\39\ See Partial Amendment No. 1; see also, Response to
Comments, SR-FINRA-2024-007.
---------------------------------------------------------------------------
In Partial Amendment No. 1, FINRA is proposing to amend proposed
Rule 6530(a)(1) and (b)(1) to extend the reporting deadline to 11:59:59
p.m. ET and to change the reporting cut-off time in proposed Rule
6530(a)(1) and (b)(1) to 7:00:00 p.m. ET. Partial Amendment No. 1 would
also make a corresponding change to the definition of ``SLATE system
hours'' in proposed Rule 6510(i) (renumbered as (h)) to specify that
the SLATE system is open through 11:59:59 p.m. ET. FINRA believes that
these
[[Page 92232]]
proposed amendments to extend SLATE system hours are appropriate to
provide additional time to process SLATE submissions at the end of the
day. FINRA believes that the proposed amendment to modify the loan cut-
off time from 7:45:00 p.m. ET to 7:00:00 p.m. ET would provide
additional time to report loans that are effected near the end of the
day, including time to complete any necessary security set up in SLATE.
8. Reporting Agent Supervision
FINRA is proposing to amend the Original Proposal to delete
proposed Rule 6530(d)(3). As originally proposed, Rule 6530(d)(3) would
have specified that a member relying on a reporting agent to report
covered securities loan information to SLATE has an obligation under
FINRA Rule 3110 (Supervision) to take reasonable steps to ensure that
the reporting agent is complying with SEA Rule 10c-1a and FINRA Rule
6530 on the member's behalf.\40\ Two commenters expressed concern with
this requirement,\41\ including that it shifts back to the covered
person the reporting compliance burden established by SEA Rule 10c-1a
and would create a reconciliation obligation that would be time
consuming, costly, and operationally intensive.\42\
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\40\ See Notice, supra note 3.
\41\ See Partial Amendment No. 1; see also, Response to
Comments, SR-FINRA-2024-007.
\42\ See Partial Amendment No. 1; see also, Response to
Comments, SR-FINRA-2024-007.
---------------------------------------------------------------------------
In Partial Amendment No. 1, FINRA is deleting proposed Rule
6530(d)(3). In its oversight of member compliance with SEA Rule 10c-1a,
in addition to reviewing whether members have complied with the
requirements of SEA Rule 10c-1a(a)(2) with respect to the use of
reporting agents, FINRA also will review the timeliness and accuracy of
SLATE reports submitted by reporting agents in light of a reporting
agent's obligations under SEA Rule 10c-1a(b) and the underlying
requirements of SEA Rule 10c-1a. After gaining experience with the
SLATE program, FINRA will reevaluate whether any additional measures
are appropriate.
9. Loan Transaction Activity and Rate Distribution Data
FINRA is proposing to amend the Original Proposal to remove the
subcategories of volume data from the aggregate loan transaction
activity to be disseminated. Under the Original Proposal, in addition
to the total 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, Rule 6540(c)(1)
paragraphs (A) through (E) would have provided that FINRA would
disseminate, by the morning of the next business day, aggregate loan
transaction activity, including information broken down into several
subcategories (e.g., by borrower type or whether a loan is an open or
term loan).\43\ Some commenters expressed concern regarding the
Original Proposal, including that the level of data granularity exceeds
the discretion provided by the Commission with respect to aggregate
data, and that bucketing data by borrower type, in particular, may
permit market participants to discern individual loan amounts that are
subject to delayed dissemination under SEA Rule 10c-1a.\44\
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\43\ See Notice, supra note 3.
\44\ See Partial Amendment No. 1; see also, Response to
Comments, SR-FINRA-2024-007.
---------------------------------------------------------------------------
In Partial Amendment No. 1, FINRA is proposing to amend paragraph
(c)(1)(A) 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. FINRA is proposing to delete paragraphs
(c)(1)(B) through (E). FINRA believes it is appropriate, at this time,
to revise the Original Proposal as described and to revisit the
possibility of enhancing the aggregate loan transaction activity in the
future after gaining experience with the impact of disseminating volume
data and analyzing what additional information could be useful while
continuing to be sensitive to potential information leakage concerns.
Any future amendments to the dissemination provisions would be subject
to a separate proposed rule change with the Commission and subject to
notice and comment.
FINRA is also proposing to amend proposed Rules 6540(a) and (b) to
clarify that FINRA will disseminate, as part of the individual loan
transaction data, the unique identifier assigned by FINRA to the
covered securities loan for a loan modification ``if reported to SLATE
or otherwise identified by FINRA.'' This amendment is appropriate
because a covered person may be unable to report a FINRA identifier for
a loan modification if the FINRA identifier was not yet assigned by
FINRA--e.g., in the case of a same-day return or partial return of
shares, where the initial covered securities loan and the modification
to the same loan are reported to SLATE on T+0.
In addition, FINRA is proposing to amend proposed Rule
6540(c)(2)(A) to provide that the loan rate distribution statistics for
loans collateralized by cash will be bucketed by U.S. currency and non-
U.S. currency, as applicable. In the Original Proposal, Rule
6540(c)(2)(A) would have provided that FINRA would disseminate the
highest rebate rate, lowest rebate rate, and volume weighted average of
the rebate rates reported for initial covered securities loans
collateralized by cash and for loan modifications collateralized by
cash (where the loan modification involved a change to the rebate
rate).\45\ The proposed amendment is appropriate because the currency
used as collateral will impact the rebate rate reported to SLATE and,
therefore, separating the rate information by U.S. currency collateral
and non-U.S. currency collateral will make the disseminated information
more useful.
---------------------------------------------------------------------------
\45\ See Notice, supra note 3.
---------------------------------------------------------------------------
10. De Minimis Loan Transaction Activity
FINRA is proposing to amend the Original Proposal to clarify the
operation of the de minimis exception for aggregate loan transaction
activity and increase the de minimis threshold. As originally proposed,
Supplementary Material .01 to proposed Rule 6540 (De Minimis Loan
Transaction Activity) would have provided that FINRA may omit from the
aggregate loan activity volume information for reportable securities
for which there were three or fewer types of initial covered securities
loan and loan modification events reported to SLATE in total on the
prior business day.\46\ Some commenters expressed concern regarding the
de minimis provision, including that the threshold of three or fewer
loan or loan modification events is insufficient to effectively prevent
information leakage and that the application of the de minimis
exception should be mandatory rather than discretionary.\47\
---------------------------------------------------------------------------
\46\ See Notice, supra note 3.
\47\ See Partial Amendment No. 1; see also, Response to
Comments, SR-FINRA-2024-007.
---------------------------------------------------------------------------
In Partial Amendment No. 1, FINRA is proposing to amend
Supplementary Material .01 to clarify the operation of the de minimis
provision and increase the threshold. Specifically, FINRA is proposing
to amend proposed Rule 6540.01 to clarify that FINRA's application of
the de minimis threshold will be non-discretionary and to provide that
FINRA will not include aggregate volume information for a security
unless there were reports submitted to SLATE on the prior business day
for at least 10 distinct covered securities loans in the reportable
security (represented by
[[Page 92233]]
different FINRA-assigned unique loan identifiers).\48\ Therefore, under
paragraph (c)(1), FINRA would not disseminate aggregate volume
information in a reportable security unless there were at least 10
unique loans reported to SLATE in the security on the prior business
day.\49\
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\48\ FINRA will not have insight into all of the relevant loan
details necessary to generate the statistics described in proposed
Rule 6540(c) with respect to modifications to loans for which
reporting was not required pursuant to SEA Rule 10c-1a(c) at the
time the loan was agreed to or last modified (i.e., modifications
reported to SLATE pursuant to SEA Rule 10c-1a(d)(2)). Therefore, the
daily loan statistics that FINRA will publish will only reflect
modifications to covered securities loans that were previously
reported to SLATE.
\49\ This proposed provision is intended to address potential
information leakage in circumstances where there are multiple
reported events associated with the same loan on a given day.
---------------------------------------------------------------------------
Following are the changes proposed in Partial Amendment No. 1, with
the proposed changes in the original filing shown as if adopted.
Proposed new language in Partial Amendment No. 1 is italicized;
proposed deletions in Partial Amendment No. 1 are in brackets:
6000. Quotation, Order, and Transaction Reporting Facilities
* * * * *
6500. Securities Lending and Transparency Engine (Slate)
6510. Definitions
For the purposes of this Rule 6500 Series, the following terms
have the following meaning:
[(a) ``Affiliate'' means an entity that controls, is controlled
by or is under common control with a Covered Person. For the
purposes of this definition, ``control,'' along with any derivative
thereof, means legal, beneficial, or equitable ownership, directly
or indirectly, of 25 percent or more of the capital stock (or other
ownership interest, if not a corporation) of any entity ordinarily
having voting rights. The term ``common control'' means the same
natural person or entity controls two or more entities.]
(a)[(b)] ``Confidential Data Element'' means an item of
information that a Covered Person must report under SEA Rule 10c-
1a(e) and FINRA Rule 6530(a)(2)(M)[(O)] through (U)[(X)].
(b)[(c)] ``Custodian'' means a Broker or Bank that is providing
safekeeping or custody services as described in Exchange Act Section
3(a)(4)(B)(viii)(I)(aa) or (bb) in connection with the Covered
Securities Loan.
(c)[(d)] ``Data Element'' means an item of information that a
Covered Person must report under SEA Rule 10c-1a(c) and FINRA Rule
6530(a)(2)(A) through (L)[(N) and (Y)].
(d)[(e)] ``Initial Covered Securities Loan'' means a new Covered
Securities Loan not previously reported to SLATE.
(e)[(f)] ``Loan Modification'' means a change to any Data
Element with respect to a Covered Securities Loan (irrespective of
whether such Covered Securities Loan was previously reported to
SLATE).
(f)[(g)] ``Securities Lending and Transparency Engine'' or
``SLATE'' means the automated system developed by FINRA that, among
other things, accommodates reporting and dissemination of loan
reports where applicable in Covered Securities Loans.
(g)[(h)] ``SLATE Participant'' means any person that reports
securities loan information to SLATE, directly or indirectly.
(h)[(i)] ``SLATE System Hours'' means the hours SLATE is open,
which are 6:00:00 a.m. Eastern Time through 11:59:59[7:59:59] p.m.
Eastern Time on a business day, unless otherwise announced by FINRA.
(i)[(j)] The following terms shall have the meanings set forth
in Exchange Act Section 3(a): ``Bank,'' ``Broker,'' ``Dealer,'' and
``Clearing Agency.''
(j)[(k)] The following terms shall have the meanings set forth
in SEA Rule 10c-1a: ``Covered Person,'' ``Covered Securities Loan,''
``Reporting Agent,'' and ``Reportable Security.''
6520. Participation in SLATE
(a) No Change.
(b) Reporting Agents
A SLATE Participant acting as a Reporting Agent shall provide
FINRA with a list naming each Covered Person on whose behalf the
Reporting Agent is providing information to SLATE and shall provide
FINRA with any updates[changes] to the list of such persons by the
end of the day on which any such change occurs, in the form and
manner specified by FINRA.
(c) No Change.
6530. Reporting Securities Loan Information
(a) Initial Covered Securities Loans
(1) When and How Initial Covered Securities Loans Are Reported
For Initial Covered Securities Loans, Covered Persons must
report the information specified in paragraph [Rule 6530](a)(2) of
this Rule to SLATE, as provided in this paragraph (a)(1):
(A) An Initial Covered Securities Loan effected on a business
day at or after 12:00:00 a.m. Eastern Time through 7:00:00[7:45:00]
p.m. Eastern Time must be reported the same day [before 8:00:00]by
11:59:59 p.m. Eastern Time;
(B) An Initial Covered Securities Loan effected on a business
day after 7:00:00[7:45:00] p.m. Eastern Time must be reported no
later than the next business day (T+1) [before 8:00:00]by 11:59:59
p.m. Eastern Time; or
(C) An Initial Covered Securities Loan 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 Eastern
Time) must be reported the next business day (T+1) [before
8:00:00]by 11:59:59 p.m. Eastern Time.
(2) Loan Information To Be Reported
For Initial Covered Securities Loans, each SLATE report shall
contain the following information:
(A) No Change.
(B) Security symbol, CUSIP, ISIN, or FIGI, or other security
identifier[if any];
(C) through (D) No Change.
[(E) The expected settlement date of the Covered Securities
Loan;]
(E)[(F)] The name of the platform or venue where the Covered
Securities Loan was effected;
(F)[(G)] The amount of the Reportable Securities loaned;
(G)[(H)] The type of collateral used to secure the Covered
Securities Loan;
(H)[(I)] For a Covered Securities Loan collateralized by cash,
the rebate rate or any other fee or charges;
(I)[(J)] For a Covered Securities Loan not collateralized by
cash, the securities lending fee or rate, or any other fee or
charges;
[(K) Any other fees or charges;]
(J)[(L)] The percentage of collateral to value of Reportable
Securities loaned required to secure such Covered Securities Loan;
(K)[(M)] [For a Covered Securities Loan with a specified term,
t]The termination date of the Covered Securities Loan;
(L)[(N)] 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;
(M) If known, the MPID of the Covered Person;
(N)[(O)] 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)[(P)] If known, the CRD Number or Investment Adviser
Registration Depository Number of each party to the Covered
Securities Loan[, if applicable];
(P)[(Q)] If known, the MPID of each party to the Covered
Securities Loan;
(Q)[(R)] If known, the LEI of each party to the Covered
Securities Loan;
(R)[(S)] 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)[(T)] 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 a[the]
customer of such Broker or Dealer;
(T)[(U)] 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
[(V) Whether the Covered Person is the lender, borrower or
intermediary;]
(U)[(W)] 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 [The] unique [internal] identifier assigned to the Covered
Securities Loan by the Covered Person responsible for reporting the
loan to SLATE.[;]
[(X) 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; and]
[[Page 92234]]
[(Y) Such modifiers and indicators as required by either the
Rule 6500 Series or the SLATE Participant specification.]
(3) No Change.
(4) Reporting Loan Rates Based on a Spread to a Benchmark or
Reference Rate
(A) Report the rebate rate or lending fee or rate; or
(B) Report:
(i) the rebate rate or lending fee or rate as of the date the
Covered Securities Loan was effected;
(ii) the spread; and
(iii) the identity of the benchmark or reference rate.
(b) Covered Securities Loan Modifications
(1) When and How Loan Modifications Are Reported
For Loan Modifications, Covered Persons must report the
information specified in paragraph (b)(2) of this Rule to SLATE, as
provided in this paragraph (b)(1):
(A) A Loan Modification effected on a business day at or after
12:00:00 a.m. Eastern Time through 7:00:00[7:45:00] p.m. Eastern
Time must be reported the same day [before 8:00:00]by 11:59:59 p.m.
Eastern Time;
(B) A Loan Modification effected on a business day after
7:00:00[7:45:00] p.m. Eastern Time must be reported no later than
the next business day (T+1) [before 8:00:00]by 11:59:59 p.m. Eastern
Time; or
(C) A Loan Modification 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 Eastern Time) must be
reported the next business day (T+1) [before 8:00:00]by 11:59:59
p.m. Eastern Time.
(2) Loan Modifications--Information To Be Reported
For Loan Modifications, each SLATE report shall contain the
following information:
(A) The unique identifier assigned by FINRA to the Initial
Covered Securities Loan, or[, if] where a Covered Person's daily
submission includes two or more reports related to the same Covered
Securities Loan and FINRA [a unique identifier] has not yet [been]
assigned a unique identifier to the Covered Securities Loan[by
FINRA], the [unique internal] identifier reported pursuant to
paragraph (a)(2)(U) of this Rule [assigned to the Covered Securities
Loan by the Covered Person responsible for reporting the loan to
SLATE];
[(B) 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;]
(B)[(C)] If known, t[T]he MPID of the Covered Person;
(C)[(D)] The date of the Loan Modification;
(D)[(E)] The time of the Loan Modification; and
[(F) 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);]
[(G) Whether the Covered Person is the lender, borrower or
intermediary;]
(E)(i)[(H)] If the Loan Modification occurs after the Data
Elements for such Covered Securities Loan are reported to SLATE, and
results in a change to information previously required to be
reported to SLATE, the specific modification and the specific Data
Elements being modified, or
(ii) If the Loan Modification is to a Covered Securities Loan
for which reporting to SLATE was not required on the date the loan
was agreed to or last modified and results in a change to any of the
Data Elements, all Data Elements as of the date of modification and
an identifier described in paragraph (a)(2)(U) of this Rule.[The
modified Data Elements for a Loan Modification to a Covered
Securities Loan previously reported to SLATE or all Data Elements
for a Loan Modification to a Covered Securities Loan that was not
previously required to be reported to SLATE; and]
[(I) Such modifiers and indicators as required by either the
Rule 6500 Series or the SLATE Participant specification.]
[(c) Modifiers and Indicators]
[Append the applicable modifiers or indicators as specified by
FINRA to all SLATE reports.]
[(1) Exclusive Arrangement
If the Covered Securities Loan is made pursuant to an exclusive
arrangement with the borrower or intermediary, select the
appropriate indicator.]
[(2) Loan to Affiliate
If the Covered Securities Loan is made to an Affiliate of the
lender or intermediary, select the appropriate indicator.]
[(3) Unsettled Loan
If an Initial Covered Securities Loan or a modification to the
amount of Reportable Securities loaned did not settle by the close
of SLATE System Hours on the expected settlement date, select the
appropriate indicator.]
[(4) Terminated Loan
If a Covered Securities Loan has been terminated, select the
appropriate indicator.]
[(5) Rate or Fee Adjustment
(A) If a loan rebate rate or lending fee accounts for a billing
adjustment or correction to amounts previously rebated or charged,
select the appropriate modifier; or
(B) If a loan rebate rate or lending fee accounts for the value
of a distribution or other economic benefit associated with the
Reportable Security, e.g., a corporate action, select the
appropriate modifier.]
[(6) Basket Loan
If a loan rebate rate or lending fee reflects a rate or fee
involving a basket of at least 10 unique Reportable Securities for a
single agreed rate or fee for the entire basket, select the
appropriate modifier.]
(c)[(d)] Compliance With Reporting Obligations
(1) No Change.
(2) No Change.
[(3) A member relying on a Reporting Agent to report Covered
Securities Loan information to SLATE has an obligation under FINRA
Rule 3110 to take reasonable steps to ensure that the Reporting
Agent is complying with SEA Rule 10c-1a and FINRA Rule 6530 on its
behalf.]
(3)[(4)] If a Covered Person makes a good faith determination
that it has a reporting obligation under SEA Rule 10c-1a [and this
Rule 6500 Series], the Covered Person or Reporting Agent, as
applicable, must report the Covered Securities Loan as provided in
this Rule, and if the Reportable Security is not entered into the
SLATE system, the Covered Person or Reporting Agent, as applicable,
must promptly notify and provide FINRA Operations, in the form and
manner required by FINRA, the information specified in Rule
6530(a)(2)(A) and (B), along with such other information as FINRA
deems necessary to enter the Reportable Security for reporting
through SLATE.
[ Supplementary Material: ----------]
[.01 Intraday Loan Modifications. If a Covered Securities Loan
previously reported to SLATE or a Covered Securities Loan not
previously reported to SLATE is modified multiple times throughout
the day, a Covered Person must report each Loan Modification as set
forth in Rule 6530(b).]
[.02 Changes to the Parties to a Covered Securities Loan. With
respect to a previously reported Covered Securities Loan, following
the addition or removal of a party required to be identified
pursuant to Rule 6530(a)(2)(O), a Covered Person must: (a) report
the termination of the previously reported Covered Securities Loan
as a Loan Modification pursuant to Rule 6530(b) that reflects the
date and time the party was added or removed and select the
Terminated Loan indicator; and (b) report an Initial Covered
Securities Loan pursuant to Rule 6530(a) that reflects the new
parties to the loan, if known (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)).]
6540. Dissemination of Loan Information
(a) Next Day Dissemination
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 will 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)[(2)] the security identifier(s) specified in Rule
6530(a)(2)(A) or (B) that FINRA determines is appropriate to
disseminate; and
(4)[(3)](A) for each Initial Covered Securities Loan, all other
Data Elements reported to SLATE, except the amount of Reportable
Securities loaned [and as otherwise provided for in paragraph (d) of
this Rule]; or
(B) for each Loan Modification reported pursuant to Rule
6530(b)(2)(E)(i)[to a Covered Securities Loan], the modified Data
Elements reported to SLATE, except the amount of Reportable
Securities loaned [and as otherwise provided for in paragraph (d) of
this Rule]; or
(C) for each Loan Modification reported pursuant to Rule
6530(b)(2)(E)(ii)[to a Covered Securities Loan that was not
[[Page 92235]]
previously required to be reported to SLATE], all other Data
Elements reported to SLATE, except the amount of Reportable
Securities loaned [and as otherwise provided for in paragraph (d) of
this Rule].
(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 will 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)[(2)] the security identifier(s) specified in Rule
6530(a)(2)(A) or (B) that FINRA determines is appropriate to
disseminate; and
(4)[(3)] the amount of Reportable Securities loaned reported to
SLATE.
(c) Daily Loan Statistics
(1) Aggregate Loan Transaction Activity
For each Reportable Security for which an Initial Covered
Securities Loan or Loan Modification is reported to SLATE on a given
business day, no later than the morning of the next business day,
FINRA will disseminate the security identifier specified in Rule
6530(a)(2)(A) or (B) that FINRA determines is appropriate to
disseminate and the [aggregate loan activity in the Reportable
Security, including the:
(A) ]aggregate volume of securities [(both in total and by
collateral type)] subject to an Initial Covered Securities Loan or
modification to the amount of Reportable Securities loaned, reported
on the prior business day.[;]
[(B) aggregate volume of securities (both in total and by
collateral type) subject to a rebate rate or fee modification,
reported on the prior business day;]
[(C) aggregate volume of securities subject to an Initial
Covered Securities Loan or modification to the amount of Reportable
Securities loaned with a specified term, and subject to an Initial
Covered Securities Loan or modification to the amount of Reportable
Securities loaned without a specified term, reported on the prior
business day;]
[(D) 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]
[(E) the total number of Initial Covered Securities Loans and
terminated Covered Security Loans (both in total and by collateral
type) reported on the prior business day.]
(2) Loan Rate Distribution Data
For each Reportable Security for which an Initial Covered
Securities Loan or Loan Modification is reported to SLATE on a given
business day, no later than the morning of the next business day,
FINRA will disseminate 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 and lending fees or rates,
as applicable, including:
(A) 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 for Initial Covered Securities
Loans collateralized by cash and for Loan Modifications
collateralized by cash (where the Loan Modification involved a
change to the rebate rate); and
(B) 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
for Loan Modifications not collateralized by cash (where the Loan
Modification involved a change to the lending fee or rate).
(d) Loan Transaction Information Not Disseminated
FINRA will not disseminate[:
(1)] any Confidential Data Elements reported to SLATE[; and
(2) any modifier or indicator required by either the Rule 6500
Series or the SLATE Participant specification that FINRA determines
shall not be publicly disseminated].
Supplementary Material: ----------
.01 De Minimis Loan Transaction Activity. Notwithstanding
paragraph (c)(1) of this Rule, FINRA will not include [may omit from
the aggregate loan activity] aggregate volume information for a
Reportable Security[ies] [for] unless [which] there were reports
submitted to SLATE on the prior business day for at least ten
distinct Covered Securities Loans in the Reportable Security
(represented by different FINRA-assigned unique loan identifiers)
[there were three or fewer types of Initial Covered Securities Loan
and Loan Modification events reported to SLATE in total on the prior
business day].
.02 No Change.
6550. Emergency Authority
No Change.
* * * * *
III. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as amended by Partial Amendment No. 1, is consistent with the
Act. Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-FINRA-2024-007 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-FINRA-2024-007. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of FINRA. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer to File Number SR-FINRA-2024-007 and should be submitted
on or before December 6, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\50\
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\50\ 17 CFR 200.30-3(a)(12).
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Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2024-27223 Filed 11-20-24; 8:45 am]
BILLING CODE 8011-01-P