On 3 January, the US Securities and Exchange Commission (SEC) published its approval of the FINRA amendments to its SLATE 6500 rule for reporting under the upcoming 10c-1a regime. The final text was in line with Pirum’s November analysis, writes Tom Veneziano, head of North America Product at Pirum.
The wide-ranging 10c-1a regulation, which aims to increase transparency via reporting requirements similar to the Securities Financing Transactions Regulation (SFTR), is set to be the most pressing topic for securities lending participants in North America.
Questions remain
One open question arising from the latest approval is the interpretation/opinion on the re-allocations. FINRAs partial amendment No. 1 removed rule 6530.01 for intra-day modifications. However, FINRA also stated that it would mirror the SEC’s requirement for changes of counterparty to a covered securities loan. This triggers a question for discussion among FINRA, industry associations, and market participants: Will a termination and new loan need to be reported for each re-allocation?
Whichever way the question is answered, the increased complexity will require modifications to reconciliations on allocations, as well as a robust automation solution to ensure regulatory adherence, both of which Pirum has already delivered on in connection with SFTR.
Another complication affects the reporting of modifications to loans that have not yet been assigned a FINRA unique ID and therefore require reconciliation with client internal IDs. Again, this type of reconciliation is standard practice for Pirum.
In addition, although the amendment has been approved, FINRA is still yet to publish a new technical spec for implementation by the industry. In view of our prior SFTR experience, we are well placed to act swiftly on this.
The window of opportunity is now in question
Ultimately, what matters the most are the go-live dates. The current dates for compliance are Jan 2nd 2026, however, the recent letter from FINRA president and CEO to the SEC, requesting an extension to the go-live date raises the question as to the exact timing of the implementation of the rule. With this uncertainty it is even more important to leverage experience and success to ensure you will be ready regardless of the timeline.
The experience of North America’s switch to T+1 settlement last year – smooth for those who prepared in time, costly for others that did not – offers a template for ensuring successful compliance and uninterrupted client service.