Reporting of Securities Lending Transactions


Francois Cooke

Publish Date


Compliance Alert

  • Compliance

The U.S. Securities and Exchange Commission (SEC) recently approved Rule 10c-1a on October 13, 2023, which requires securities lending transactions to be reported to the Financial Industry Regulatory Authority (FINRA) at the end of the day that the loan is effected or modified.

The rule affects “Covered Persons,” which are defined as:

  • Any person agreeing to a covered securities loan on behalf of a lender (intermediary)
  • Any person agreeing to a covered securities loan as a lender when an intermediary is not used
  • A broker-dealer when borrowing fully paid or excess margin securities

Covered Persons must report specific information about their securities lending transactions, including intermediaries and direct lenders. Clearing agencies acting as central counterparties need not report securities lending transactions.

Securities transactions that are deemed Covered Securities Loans (CSLs) must be reported. This includes the following:

  • Equity Securities
  • Debt Securities
  • Crypto Assets

Only securities considered to be “Reportable Securities” need to be included in reports. Reportable Securities are those reported under existing requirements through platforms such as the SEC’s consolidated audit trail (CAT), FINRA's Trade Reporting and Compliance Engine (TRACE), and the Municipal Securities Rulemaking Board’s Real Time Reporting System (RTRS).

The following information from CSLs must be reported:

  • Legal name of the issuer of the securities that are borrowed
  • The issuer’s legal entity identifier (LEI), International Securities Identification Number (ISIN), CUSIP, or Financial Instrument Global Identifier (FIGI)
  • Securities’ ticker symbols
  • Time and date of the CSL
  • Name of platform or venue used
  • Amount of reportable securities that were loaned
  • Loan rates, fees, charges, and rebates (or any other fee or charges)
  • Type of collateral provided for the CSL and collateral’s percentage of loaned securities’ value
  • Termination date of the CSL
  • Borrower type, e.g., broker, dealer, bank, customer, bank, clearing agency, custodian

Any transaction modifications must also be reported, including changes to the CSLs that occurred before the requirement’s reporting date.

Broker-dealers or clearing agents can report for Covered Persons when acting as Reporting Agents. Covered Persons can also report their transactions through vendors that are not Reporting Agents but retain the reporting responsibility. In both cases, Covered Persons need to establish agreements with agents or vendors reporting on their behalf.

FINRA will publish information on the aggregate securities lending transaction activity, including loan rates for each security. It will not publish the names of the involved parties. We also note that if a securities loan is used to close out a fail to deliver related to a short sale (including when such transactions address Rule 204 of Regulation SHO), it does not have to be reported.

FINRA has yet to establish rules for CSL reporting. However, the SEC has required it to do so no later than four months after Rule 10c-1a’s effective date, which will be 60 days after its adopting release appears in the Federal Register. The reporting requirement for Covered Persons takes effect 24 months after that date.

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