SEC Adopts New Rule 10c-1a to Enhance Transparency in the Securities Lending Market

The SEC has adopted Rule 10c-1a, which creates increased transparency and efficiency in the securities lending market. The rule requires certain persons to report data about securities loans to a registered national securities association (RNSA), such as the Financial Industry Regulatory Authority (FINRA). The RNSA then must make certain information it receives, such as daily aggregate transaction activity and loan rates for each reportable security, publicly available. The rule will become effective 60 days after its publication in the Federal Register. Additionally, the RNSA must propose rules within four months and have them finalized within twelve months of the rule’s effective date, while covered persons will need to start reporting required information to the RNSA within two years of the rule’s effective date. Finally, the RNSA is required to publicly report the information within 90 days of receiving it. This new rule should improve oversight and enforcement functions of the RNSA, as well as increase transparency of the securities lending market both to regulators and the public.