SEC approves FINRA rule 6500 series requiring securities lending reporting

On January 2, 2025, the Securities and Exchange Commission (the SEC) published an order approving a proposed rule change filed by the Financial Industry Regulatory Authority, Inc. (FINRA) to adopt the new FINRA Rule 6500 Series (Securities Lending and Transparency Engine (SLATE) (the Rule) to (1) require reporting by covered persons of securities loans, and (2) provide for the public dissemination of certain reported loan information.¹

The Rule establishes reporting requirements for “Covered Securities Loans” and provides for FINRA’s dissemination of individual and aggregate Covered Securities Loan information and loan rate statistics. Reporting requirements apply to both “Initial Covered Securities Loans” and “Loan Modifications,” as defined by the Rule. FINRA has also separately filed a proposed rule change that would establish Covered Securities Loan reporting fees and securities loan data products and associated fees.²

FINRA purportedly has adopted the Rule to improve transparency and efficiency in the securities lending market, consistent with Exchange Act Rule 10c-1a (SEC Rule 10c-1a), which sets requirements for reporting of Covered Securities Loans by Covered Persons to a registered national securities association (RNSA), of which FINRA is the only one.³ The Rule adopts key definitions from SEC Rule 10c-1a, as follows:

• “Covered Person” means (1) any person who agrees to a Covered Securities Loan, as a lender or intermediary on behalf of a lender (other than a clearing agency functioning as a central counterparty), or (2) a broker or dealer when borrowing fully paid or excess margin securities from its customers pursuant to SEC Rule 15c3-3(b)(3).⁴

• “Reporting Agent” means a broker, dealer, or registered clearing agency that enters into a written agreement with a Covered Person to fulfill its reporting obligations under the Rule.

• “Covered Securities Loan” means a transaction in which any person on behalf of itself or one or more other persons, lends a Reportable Security to another person (excluding transactions of a clearing agency as a central counterparty and certain uses of margin securities by a Broker or Dealer).

• “Reportable Security” means any security or class of an issuer's securities for which information is reported or required to be reported to the consolidated audit trail (CAT) under Rule 613 of the Exchange Act,⁵ FINRA’s Trade Reporting and Compliance Engine (TRACE), or the Municipal Securities Rulemaking Board's Real-Time Transaction Reporting System (RTRS).

Under the Rule, any Covered Securities Loan not previously reported to SLATE (an Initial Covered Securities Loan) must be reported the same day the loan is effected, unless effected after 7:00 PM Eastern Time, in which case it must be reported within the next business day. The Rule requires reporting of confidential and non-confidential loan information. Non-confidential loan information to be reported under the Rule includes:

• the legal name and Legal Entity Identifier (LEI) of the security issuer;

• the CUSIP or other security identifier;

• the date, time and platform or venue that the loan was effected;

• the amount of Reportable Securities loaned and type of collateral used to secure the loan;

• any rate, fee or charges related to cash or securities used as collateral for the loan;

• the percentage of collateral to value of the Reportable Securities loaned to secure the loan;

• the termination date of the loan; and

• whether the borrower is a Broker or Dealer, a customer, a Clearing Agency, a Bank, a Custodian, or other person.

Confidential loan information to be reported includes, if known:

• the market participant identifier (MPID) of the Covered Person and each party to the loan;

• the legal name and LEI of each party to the loan;

• the CRD Number or IARD Number of each party to the loan;

• whether each party to the loan is the lender, borrower, or intermediary;

• if the lender is a Broker or Dealer and a borrower of a customer, whether the security is loaned from the lender’s inventory to its customer;

• whether the loan is being used to close out a fail to deliver (pursuant to or outside of SEC Regulation SHO); and

• where FINRA has not assigned a unique identifier to the loan, one such identifier from the Covered Person responsible for reporting the loan to SLATE.

Any confidential loan information reported under the Rule will not be publicly disseminated by FINRA.

In addition, the Rule requires Covered Persons to report a Loan Modification where a change is made to any of the above non-confidential data elements for a Covered Securities Loan previously reported to SLATE, and must include:

• the unique identifier FINRA has assigned to the Initial Covered Securities Loan (or the Covered Person’s unique identifier if not yet assigned by FINRA);

• the MPID of the Covered Person;

• the date and time of the Loan Modification; and

• the specific modification to the data elements being modified.

Consistent with SEC Rule 10c-1a’s requirements, Covered Persons have an ongoing obligation to report Initial Covered Securities Loans and Loan Modifications to FINRA timely, accurately, and completely. A Covered Person may use an agent to submit loan information to SLATE, but unless the Covered Person has retained a Reporting Agent as permitted under SEC Rule 10c-1a, primary responsibility to report the loan information remains with the Covered Person.

To comply with these requirements, Covered Persons and/or Reporting Agents must connect to SLATE as a SLATE Participant to report applicable Covered Securities Loans in conformity with SEC Rule 10c-1a and the Rule. Reporting Agents must provide FINRA with a list naming each Covered Person on whose behalf the Reporting Agent is reporting Covered Securities Loans.

Finally, the Rule prescribes that FINRA will publicly disseminate daily loan information pertaining to the aggregate loan transaction activity and distribution of loan rates for each Reportable Security. On a T+1 basis, FINRA will disseminate loan-level data for Initial Covered Securities Loans and Loan Modifications, except for the loan amount. On a T+20 basis, FINRA will disseminate loan amount data for Initial Covered Securities Loans and Loan Modifications.

Implementation of the Rule will take place in two stages. The reporting requirements on Covered Persons and Reporting Agents become effective on January 2, 2026, while FINRA’s public data dissemination requirements will take effect on April 2, 2026.

1 Securities Exchange Act Release No. 34-102093 (January 2, 2025), 90 FR 1563 (January 7, 2025) (“Notice”).

2 Notice, 89 FR 38206.

3 17 CFR 240.10c-1a.

4 17 CFR 240.15c3-3.

5 17 CFR 242.613.

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