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SEC Rule 10c-1a: Driving Transparency and Reporting in Securities Finance Transactions



On Oct 13, 2023, The Securities and Exchange Commission (SEC) adopted a new rule, identified as final Rule 10c-1a, under the Securities Exchange Act of 1934. This rule aims to enhance the transparency and efficiency of the securities lending market by requiring certain entities to report information about securities loans to a registered national securities association (RNSA). 


Coverage and Obligations

Who Must Report:

The rule specifies the entities, termed as 'covered persons,' who are obliged to report. These include:


  • Any person agreeing to a covered securities loan on behalf of a lender (intermediary).

  • A person agreeing to a covered securities loan as a lender when no intermediary is used.

  • Brokers or dealers borrowing fully paid or excess margin securities.

  • Clearing agencies are excluded from reporting if acting only as central counterparties or central securities depositories.


Definition of Covered Securities Loan: The rule defines a covered securities loan as any transaction where a reportable security is lent by a person either on their behalf or on behalf of others, excluding certain positions at a clearing agency related to central counterparty or central securities depository services.


Reporting Requirements for Covered Persons:

Covered persons are required to report three types of data:

  • Material terms of the covered securities loan.

  • Modifications to a covered securities loan.

  • Confidential information connected to a covered securities loan.


All this information must be provided to an RNSA (Registered National Securities Association) by the end of the day when the loan is effected or modified.


 Information to be Reported:

  • Loan data elements: Material terms of the loan.

  • Loan modification data elements: Any changes to the original terms.

  • Confidential data elements: Any confidential information related to the loan.


 This information must be reported to an RNSA by the end of the day of the loan's effectuation or modification.


 Reportable Security: This term encompasses any security or class of securities for which information is reported or required to be reported to various regulatory and compliance systems, such as the consolidated audit trail, the Financial Industry Regulatory Authority's Trade Reporting and Compliance Engine (TRACE), or the Municipal Securities Rulemaking Board’s Real-Time Transaction Reporting System (RTRS).


RNSA Specific Requirements:

Public Disclosure:


  • The rule mandates that certain information be made publicly available by the RNSA by the morning of the business day following the covered securities loan. This includes unique identifiers assigned to loans, security identifiers, data elements (except for loan amounts), and aggregate transaction activity.

  • Modifications to the data elements and loan amounts must also be publicly disclosed, with a delay for the loan amount details (20 business days after the loan is effected or modified).


Data Retention and Availability:


  • The RNSA is required to implement rules for the collection of information and make this information publicly available in accordance with existing Exchange Act rules.

  • The RNSA must maintain this information on its website or similar electronic means without use restrictions for at least five years.

  • The final rule permits the RNSA to establish and collect reasonable fees for these services. 


Modifications from the Proposed Rules:

The final Rule 10c-1a includes several modifications from the proposed rule, which were made in response to comments. These changes include:


  • Change in reporting frequency: The final Rule 10c-1a adopted an end-of-day reporting requirement. This modification from more frequent intraday reporting to end-of-day reporting was adopted to address concerns about the excessive number of incomplete or slightly modified reports that could occur throughout the day. This change aligns better with the nature of securities loan transactions, where many of the terms may not be agreed upon or may be updated throughout the day and are finalized at the end of the day.

  • Scope of Persons Required to Report: The final rule redefines the term “covered person” to clarify who has a reporting obligation. It now requires reporting by:


  1. Any person who agrees to a covered securities loan on behalf of the lender.

  2. Any person who agrees to a covered securities loan as a lender if no intermediary is used.

  3. A broker or dealer when borrowing fully paid or excess margin securities.

  4. The rule also clarifies that an intermediary does not need to be a specific entity type in this context.


  • Exclusion of Clearing Agencies: Clearing agencies are excluded from the definition of a “covered person” when they are engaged only in specific activities related to central counterparty or central securities depository functions.

  • Distinct Requirements for Covered Persons and Reporting Agents: The requirements for covered persons and reporting agents are now separated into different paragraphs in the rule.


Compliance Date:

The final rules become effective on January 2, 2024. The following are the dates to watch for once the rules go into effect:


  • A Registered National Securities Association (RNSA) must propose rules according to final Rule 10c-1a(f) within four months of the effective date of final Rule 10c-1a.

  • The proposed RNSA rules must be effective 12 months after the effective date of final Rule 10c-1a.

  • Covered persons are required to report Rule 10c-1a information to an RNSA starting on the first business day 24 months after the effective date of final Rule 10c-1a. This date is referred to as the “reporting date.”

  • RNSAs must publicly report Rule 10c-1a information according to final Rules 10c-1a(g)


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