The U.S. Securities and Exchange Commission (SEC) has published a proposed rule requiring securities lenders to provide material terms of transactions to a registered national securities association.
Exchange Act Rule 10c-1 is in accordance with Congress’s mandate in the Dodd-Frank Act mandating the SEC increase transparency as it relates to loan or borrowing of securities for brokers, dealers and investors by ensuring market participants, the public, and regulators have access to securities lending information.
“Securities lending and borrowing is an important part of our market structure,” SEC Chair Gary Gensler said. “Currently, though, the securities lending market is opaque. In today’s fast-moving financial markets, it’s important that market participants have access to fair, accurate, and timely information. I believe this proposal would bring securities lending out of the dark. We have put out this proposal for comment and I look forward to hearing feedback from the public.”
The public comment period will remain open for 30 days following the proposed rule publication in the Federal Register.
“The proposal focuses on the need for transparency in the securities lending market and further satisfies the Commission’s Congressional mandate to promulgate rules that are designed to provide such transparency to this market,” said Division of Trading and Markets Acting Director David Saltiel.
SEC Chief Economist Jessica Wachter said the rule would bring transparency into the securities lending market, giving the market information that is both comprehensive and timely.