enforce written policies and procedures that are reasonably designed to
provide Rule 10c-1a information to an RNSA. However, in the final rule,
as modified with non-substantive, technical, or clarifying changes to
the rule text consistent with the other changes made to the overall
final rule text, such Rule 10c-1a information is provided (by the
reporting agent) to an RNSA on behalf of a ``covered person'' (which is
a newly defined term in the final rule, rather than the term ``another
person,'' as was used in the proposed rule); and, also consistent with
the proposed rule, such information is to be provided ``in the format
and manner required by the applicable rule(s) of an RNSA, and within
the time periods specified in paragraphs (c) through (e)'' \219\ (which
is designed to clarify the proposed rule text, ``in the manner, format,
and time consistent with Rule 10c-1'' \220\). Apart from the
aforementioned changes, the policies and procedures requirement of the
reporting agent remains unchanged from the proposed rule.
---------------------------------------------------------------------------

    \217\ See supra note 205 regarding paragraph (a)(2)(i) of the
proposed rule's policies and procedures requirement; paragraph
(a)(2)(ii) of the proposed rule's written agreement with an RNSA
requirement; and paragraph (a)(2)(iii) of the proposed rule's list
of names requirement.
    \218\ Specifically, once the covered person enters into the
required written agreement with the reporting agent, and the covered
person provides the reporting agent with timely access to the Rule
10c-1a information, paragraph (b)(1) of the final rule specifically
requires the reporting agent to provide the Rule 10c-1a information
to an RNSA on behalf of a covered person (in the format and manner
required by the rule(s) of such RNSA and within the time periods
specified in paragraphs (c) through (e) of final Rule 10c-1a). See
final Rule 10c-1a(b)(1).
    \219\ See final Rule 10c-1a(b)(2).
    \220\ See proposed Rule 10c-1(a)(2)(i).
---------------------------------------------------------------------------

    Additionally, consistent with the proposed rule, paragraph (b)(3)
of the final rule requires the reporting agent to enter into a written
agreement with an RNSA that permits the reporting agent to provide the
required Rule 10c-1a information to an RNSA (e.g., establish the
required connectivity with such RNSA) on behalf of a covered person.
More specifically, the final rule provides that a reporting agent shall
``[e]nter into a written agreement with an RNSA that permits the
reporting agent to provide Rule 10c-1a information to an RNSA on behalf
of a covered person.'' \221\ Other than replacing the proposed term
``another person'' with the newly defined term ``covered person'' in
the final rule, the written agreement requirement of the reporting
agent remains unchanged from the proposed rule.
---------------------------------------------------------------------------

    \221\ See final Rule 10c-1a(b)(3) (replacing term ``another
person'' from paragraph (a)(2)(ii) of the proposed rule with the
term ``covered person'').
---------------------------------------------------------------------------

    Moreover, the Commission is adopting 17 CFR 240.10c-1a(b)(4)
(``final Rule 10c-1a(b)(4)''), which requires the reporting agent to
``provide an RNSA with a list naming each covered person on whose
behalf the reporting agent is providing Rule 10c-1a information to an
RNSA,'' consistent with the proposed rule, although paragraph (b)(4) of
final Rule 10c-1a adds the term ``naming'' to replace the less-
descriptive term ``of,'' as was used in the proposed rule. For
consistency, the final rule also includes the newly defined term
``covered person'' in place of ``person and lending agent,'' as was
used in paragraph (a)(2)(iii) of the proposed rule. Moreover, paragraph
(b)(4) of the final rule clarifies the proposed rule by streamlining
the text, ``provide an RNSA with any updates to the list of such
persons by the end of the day such list changes,'' by removing the
extra ``on the day'' in the sentence. Also, the final rule slightly
modifies the rule text ``an updated list'' to read instead ``any
updates to the list'' to clarify that any updates (or changes) to the
list (and the updated list itself) must be provided to an RNSA ``by the
end of the day such list changes.'' \222\ A reporting agent's written
policies and procedures will need to address the above requirements.
---------------------------------------------------------------------------

    \222\ See final Rule 10c-1a(b)(4).
---------------------------------------------------------------------------

2. Recordkeeping Requirements of a Reporting Agent--Rule 10c-1a(b)(5)
Proposed Rule
    Paragraph (a)(2)(iv) of the proposed rule would have required that
the reporting agent maintain certain information for a period of three
years, the first two in an easily accessible place.\223\ The
information required to be maintained included the Rule 10c-1
information provided by the covered

person to the reporting agent, including the time of receipt, as well
as the Rule 10c-1 information that the reporting agent provided to an
RNSA, and time of transmission. Additionally, under the proposed rule,
the reporting agent would have to retain the written agreements between
the reporting agents and beneficial owners, lending agents, and an
RNSA.\224\ As the Commission explained, the proposed recordkeeping
requirements were designed to help facilitate the Commission's
oversight of reporting agents and review the reporting agents'
compliance with the requirement to provide the Rule 10c-1 information
to an RNSA.\225\
---------------------------------------------------------------------------

    \223\ See proposed Rule 10c-1(a)(2)(iv).
    \224\ See Proposing Release, 86 FR 69811.
    \225\ See Proposing Release, 86 FR 69811.
---------------------------------------------------------------------------

Final Rule
    One commenter stated that it was redundant and unnecessary for the
reporting agent to retain data, as FINRA already has the data.\226\
However, pursuant to 17 CFR 240.10c-1a(b)(5) (``final Rule 10c-
1a(b)(5)''), the reporting agent would not only be required to retain
data that it submitted to an RNSA (including time of transmission), but
would also be required to retain the data it received from the covered
person (including time of receipt), which would demonstrate compliance
with the timeliness requirements of the rule or whether the reporting
agent itself received the data in an untimely manner from the covered
person, as well as the written agreements required in order to be
eligible as a reporting agent. Such records would be helpful to
regulators in identifying and reconstructing the reasons for missing,
incomplete, or untimely data (e.g., whether it was the result of
untimely receipt by the reporting agent or issues with the reporting
agent's operations). The data would also help reporting agents respond
to Commission inquiries as to whether the reporting agent or the
covered person appropriately complied with the final rule. The records
of data submitted to an RNSA would provide context for such inquiries,
as well as allow for a comparison of data received (by the reporting
agent) and submitted to an RNSA, to the data published by an RNSA,
allowing regulators to determine whether there are issues with an
RNSA's processing of data received.
---------------------------------------------------------------------------

    \226\ See James J. Angel Letter, at 7.
---------------------------------------------------------------------------

    Accordingly, the Commission is adopting, in paragraph (b)(5) of
final Rule 10c-1a without substantive changes, the proposed
recordkeeping requirements contained in paragraphs (a)(2)(iv)(A) and
(B) of the proposed rule that provide for the reporting agent to
preserve for a period of not less than three years, the first two years
in an easily accessible place, both the Rule 10c-1a information
obtained by the reporting agent from the covered person pursuant to
paragraph (a)(2) of the final rule, including the time of receipt, and
the corresponding Rule 10c-1a information provided by the reporting
agent to an RNSA, including the time of transmission to an RNSA \227\;
and, the written agreements as required under paragraphs (a)(2) and
(b)(3) of the final rule.\228\
---------------------------------------------------------------------------

    \227\ See final Rule 10c-1a(b)(5); 17 CFR 240.10c-1a(b)(5)(i)
(``final Rule 10c-1a(b)(5)(i)''); 17 CFR 240.10c-1a(b)(5)(ii)
(``final Rule 10c-1a(b)(5)(ii)'').
    \228\ While the term ``Rule 10c-1a information'' has stayed the
same in the final rule, as also explained below, in Part VII.F, the
scope of the information required by the final rule has been
modified with the deletion of the proposed requirement to provide
information regarding the total amount of ``securities on loan'' and
``available to lend'' data, as was originally proposed.
---------------------------------------------------------------------------

D. Scope of Securities Required To Be Reported--Rule 10c-1a(j)(3)

Proposed Rule
    In the Proposing Release, the Commission stated its preliminary
belief that proposed Rule 10c-1 should apply to all securities ``to
ensure that a complete picture of transactions involving the loan of
securities is provided to the RNSA.'' \229\ Accordingly, the proposed
rule would have required the reporting of loans of any security (e.g.,
both equity and debt).\230\
---------------------------------------------------------------------------

    \229\ See Proposing Release, 86 FR 69808.
    \230\ See proposed Rule 10c-1(a)(1). See also Proposing Release,
86 FR 69808. See, e.g., 17 CFR 230.902 (defining ``Debt securities''
as ``any security other than an equity security'' and an ``equity
security'' as defined in 17 CFR 230.405).
---------------------------------------------------------------------------

    Specifically, the Commission stated that, ``if the Commission were
to limit the scope of the proposed Rule (e.g., to only equity
securities) then a significant number of securities lending
transactions would be excluded and the market efficiencies and
reduction of information asymmetry that the Commission anticipates will
result from proposed Rule 10c-1 would not accrue to non-equity
securities.'' \231\
---------------------------------------------------------------------------

    \231\ See Proposing Release, 86 FR 69808 (citing A Pilot Survey
of Agent Securities Lending Activity, Off. Of Fin. Research, Working
Paper No. 16-08, 2016, at 8, available at https://www.financialresearch.gov/working-papers/files/OFRwp-2016-08_Pilot-Survey-of-Securities-Lending.pdf).
---------------------------------------------------------------------------

Final Rule
    In response to proposed Rule 10c-1, some commenters expressed
general support for increased transparency and price discovery in the
securities lending market by increasing the amount and availability of
data in the market.\232\ Other commenters offered support for the
inclusion of all loans of securities.\233\ Another commenter expressed
the view that ``[t]here is an urgent need to require securities lenders
to provide greater details of their loans to a RNSA as outlined by the
proposed changes to Rule 10c-1 . . . [m]arket participants and
regulators alike will greatly benefit from the greater transparency
that comes from reporting every securities lending transaction as a
result of the proposed changes to Rule 10c-1, just as they have from
the trade-by-trade reporting that was instituted in the corporate bond
market since TRACE was introduced.'' \234\
---------------------------------------------------------------------------

    \232\ See supra note 47.
    \233\ See Nasdaq Letter, at 2; Morningstar Letter, at 4.
    \234\ See AFREF Letter 1, at 3.
---------------------------------------------------------------------------

    One commenter recommended that the Commission make explicit ``the
types of securities loans to which Rule 10c-1 applies so that market
participants have clarity as to which types of securities loans must be
reported.'' \235\ The final rule makes explicit the types of
transactions to which the final rule applies and the securities that
are within the scope of the final rule through two newly defined terms:
``covered securities loan'' and ``reportable security.'' The definition
of the term ``covered securities loan'' in paragraph (j)(2) of the
final rule makes explicit the types of loans to which the final rule
applies, as discussed below, in Part VII.E. The definition of the term
``covered securities loan'' refers to a transaction in which any person
on behalf of itself or one or more other persons, lends a ``reportable
security'' to another person.\236\ The final rule defines the term
``reportable security'' as ``any security or class of an issuer's
securities for which information is reported or required to be reported
to the consolidated audit trail as required by Sec.  242.613 (``Rule
613'') of the Exchange Act and the CAT NMS Plan (``CAT''), the
Financial Industry Regulatory Authority's Trade Reporting and
Compliance Engine (``TRACE''), or the Municipal Securities Rulemaking
Board's Real Time Reporting System (``RTRS''), or any reporting system
that replaces one of these systems.'' \237\ The definition of the term
``reportable security'' aligns the securities for which loans must be
reported with securities for which transactions are currently being
reported to existing reporting regimes, specifically, the CAT, TRACE,
and RTRS. At this time, data on

securities loans should be consistent with existing reporting regimes
for other transactions in the same securities.
---------------------------------------------------------------------------

    \235\ ICI Letter 1, at 7.
    \236\ Final Rule 10c-1a(j)(2).
    \237\ Final Rule 10c-1a(j)(3).
---------------------------------------------------------------------------

    Aligning the scope of securities for covered securities loans with
existing transaction reporting systems will provide a number of
benefits. For instance, such alignment will allow regulators to obtain
a more complete view across the different types of transactions for the
same securities. In addition, many market participants are already
familiar with the existing systems, either as reporting entities or, in
the case of TRACE and RTRS, as users of the data.
    Presently, securities that fall outside of the existing reporting
regimes include: (1) for TRACE: fixed-income transactions in securities
with a maturity of one calendar year or less, such as money market
instruments,\238\ and non-U.S. dollar-denominated debt are excluded
from reporting requirements in TRACE; \239\ (2) for the CAT: equity
transactions in ``restricted securities,'' as that term is defined in
17 CFR 230.144(a)(3) (``Rule 144'') of the Securities Act,\240\ are
generally not reportable to the CAT because they are not subject to
prompt last sale reporting rules; \241\ and (3) for RTRS: municipal
securities transactions excepted under MSRB Rule G-14,\242\ including a
small number of transactions for securities without assigned Committee
on Uniform Securities Identification Procedure (``CUSIP'') numbers,
municipal fund securities (i.e., 529 Plans, ABLE programs, local
government investment pools), and inter-dealer transactions ineligible
for comparison of trade settlement date at a clearing agency.\243\ To
provide consistency with existing reporting regimes, final Rule 10c-1a
also incorporates these exclusions.
---------------------------------------------------------------------------

    \238\ See, e.g., FAQ 3.1.43, available at https://www.finra.org/filing-reporting/trace/faq (``[a]s stated in Rule 6710(a), the
definition of TRACE-Eligible Security does not include a Money
Market Instrument. Under recent amendments to Rule 6710(o)
pertaining to discount notes, ``Money Market Instrument'' means a
debt security that at issuance has a maturity of one calendar year
or less, or, if a discount note issued by an Agency, as defined in
Rule 6710(k), or a Government-Sponsored Enterprise, as defined in
Rule 6710(n), a maturity of one calendar year and one day or less
(i.e., not later than 366 days from the date of issuance, or if a
leap year, not later than 367 days from the date of issuance).'').
    \239\ See, e.g., https://www.finra.org/filing-reporting/trace/trace-foreign-sovereign-debt.
    \240\ See, e.g., https://www.catnmsplan.com/faq (see FAQ B11
describing the types of products in scope for reporting to the CAT).
    \241\ Under the CAT NMS Plan, ``Eligible Security'' includes:
(i) all NMS Securities, meaning ``any security or class of
securities for which transaction reports are collected, processed,
and made available pursuant to an effective transaction reporting
plan, or an effective national market system plan for reporting
transactions in Listed Options,'' and (ii) all OTC Equity
Securities, meaning ``any equity security, other than an NMS
Security, subject to prompt last sale reporting rules of a
registered national securities association and reported to one of
such association's equity trade reporting facilities.'' Further,
while the CAT NMS Plan does not define ``prompt last sale reporting
rules,'' the Operating Committee has determined that transactions in
``restricted securities'' (as defined by Rule 144(a)(3)) are not
reportable to the CAT because they are not subject to prompt last
sale reporting rules. However, transactions in direct participation
programs must be reported to the CAT in Phase 2c of Industry Member
reporting.
    \242\ Brokers, dealers, and municipal securities dealers
(``municipal dealers'') must report transactions in municipal
securities pursuant to MSRB Rule G-14. Pursuant to Rule G-14, each
municipal dealer reports to the MSRB or its designee information
about each purchase and sale transaction effected in municipal
securities to RTRS in the manner prescribed by Rule G-14, available
at https://www.sec.gov/rules/sro/msrb/2018/34-83038-ex5.pdf.
    \243\ See, e.g., Specifications for Real-Time Reporting of
Municipal Securities Transactions (Nov. 2022), at 15 (``1.2.1
Securities that Must be Reported[:] In the real-time environment,
all customer trades in municipal securities issues that have CUSIP
numbers assigned by the CUSIP Service Bureau of Standard & Poor's
must be reported, except municipal fund securities. Dealers should
not report (a) customer transactions in issues ineligible for CUSIP
number assignment and (b) municipal fund securities. For inter-
dealer trades, transactions must be reported in all municipal
securities issues eligible for comparison in RTTM [the National
Securities Clearing Corporation's (``NSCC'') Real-Time Trade
Matching (``RTTM'') web-based trade input method]. In addition, Rule
G-14 requires that the role of a clearing broker in RTTM-eligible
agency transactions effected by an introducing broker against the
principal positions of the clearing broker shall be reported . . ..
If an issue is not RTTM-eligible (because of the lack of a CUSIP
number for the security or other reasons), inter-dealer trades in
the issue are not subject to the reporting requirement.'')
(footnotes omitted), available at https://www.msrb.org/sites/default/files/RTRS-Specifications.pdf.
---------------------------------------------------------------------------

    The Commission also received comments with suggestions to limit the
scope of securities for which loans must be reported under the proposed
rule.\244\ One commenter favored narrowing the proposed scope of
securities to only equity securities that transact in significant
volume in the U.S., namely equity securities listed or traded on a
national securities exchange ``to avoid uncertainty for non-U.S.
borrowers and lenders transacting in securities that are primarily
relevant in non-U.S. markets and to provide for a measured approach in
introducing data reporting and dissemination into the marketplace.''
\245\ Investors will also benefit from the increased transparency into
loans of equity securities that are not listed or traded on a national
securities exchange (i.e., loans of equities that are traded over-the-
counter (``OTC'')) provided by the final rule. The Commission
understands that existing lending transparency systems currently
include information about loans of exchange-listed and OTC securities.
Thus, lenders should generally already be accustomed to providing and
receiving such data. Further, OTC securities tend to be less liquid and
publicly available information about an issuer of an OTC security may
be limited or nonexistent,\246\ and thus such securities may be harder
to borrow. Accordingly, data concerning loans of less liquid
securities, such as OTC securities, will be beneficial to market
participants by reducing information asymmetries and improving pricing
efficiency by facilitating benchmarking for the loans of less liquid
securities.\247\
---------------------------------------------------------------------------

    \244\ See, e.g., Federated Hermes Letter, at 2; Letter from
Ji[rcaron][iacute] Kr[oacute]l, Deputy CEO, Global Head of
Government Affairs, Alternative Investment Management Association
(Jan. 7, 2022) (``AIMA Letter 1''), at 5; RMA Letter, at 5; ICI
Letter 1, at 7; ABA Letter, at 4.
    \245\ See, e.g., RMA Letter, at 15.
    \246\ See, e.g., Publication or Submission of Quotations Without
Specified Information, Release No. 34-89891 (Sept. 16, 2020), 85 FR
68124 at 68125 (Oct. 27, 2020) (Adopting Release) (``However, in
other cases, there is no or limited current public information
available about certain issuers of quoted OTC securities to allow
investors or other market participants to make informed investment
decisions.'').
    \247\ See infra Part IX.C.1 (discussing the benefits of
increased transparency in less liquid lending markets).
---------------------------------------------------------------------------

    Commenters also requested clarification regarding which types of
securities would be reportable,\248\ and some suggested limiting the
scope of reportable securities. For example, one commenter suggested
limiting the scope to equities for a period of time while the
Commission evaluates whether to expand the scope of reporting to
additional asset classes.\249\ Another commenter stated that the final
rule should ``capture the most relevant and appropriate securities for
the reporting regime [referring to equity securities] while not
precluding the inclusion of other securities over time as the SEC and
market participants gain more experience with the reporting regime.''
\250\ The definition of the term ``reportable security'' in the final
rule is not limited to equities for the reasons discussed below, in
this part. The definition of the term ``reportable

security'' in paragraph (j)(3) of the final rule will help provide
certainty to non-U.S. borrowers and lenders regarding the securities
that are within the scope of the final rule (i.e., securities or any
class of an issuer's securities for which information is reported or
required to be reported to the CAT, TRACE, or RTRS, or any reporting
system that replaces one of these systems). In addition, Part VII.M
below discusses the domestic application of the final rule, which
should also help provide certainty to non-U.S. borrowers and lenders
transacting in securities that are primarily relevant in non-U.S.
markets about the application of the final rule. With respect to taking
a measured approach in introducing data reporting and dissemination
into the marketplace, the Commission is establishing the specific
compliance dates discussed below in Part VIII. Such compliance dates
should provide adequate time for covered persons to implement systems
for data reporting and for RNSAs to implement data dissemination
systems. Another commenter recommended that the Commission begin with
reporting requirements for loans of U.S. equity securities because such
loans ``mostly occur on electronic trading platforms, making the
generation of trade data for these loans more straightforward than
loans of other asset classes.'' \251\ As discussed above, the
Commission has provided a compliance date that will provide adequate
time for covered persons to comply with the final rule, even for loans
of securities that may not occur on an electronic trading platform, and
will not further delay transparency for OTC investors, which are
primarily retail.\252\
---------------------------------------------------------------------------

    \248\ See, e.g., BlackRock Letter, at 2 (``as securities lending
market dynamics differ by the asset class, we recommend the
Commission provide further clarity on which asset classes are in
scope''); ICI Letter 1, at 6.
    \249\ See ICI Letter 1, at 7.
    \250\ See RMA Letter, at 17 (supporting an initial definition of
``securities'' to include ``equity securities that are part of the
national market system'' because that definition ``captures the most
relevant and appropriate securities for the reporting regime while
not precluding the inclusion of other securities over time as the
SEC and market participants gain more experience with the reporting
regime'').
    \251\ BlackRock Letter, at 9.
    \252\ See Andrew Ang et al., Asset Pricing in the Dark: The
Cross-Section of OTC Stocks, 26 Rev. Fin. Stud. 2985-3028 (2013).
---------------------------------------------------------------------------

    Some commenters requested a phased approach to the overall
implementation of the final rule, which is discussed below, in Part
VIII, including a recommendation that implementation of the final rule
begin with loans of equity securities.\253\ However, current lending
systems include data on loans of fixed income securities.\254\ Thus,
lenders should generally be accustomed to providing and analyzing data
on loans of fixed income securities. Further, as discussed below, in
Part VIII, such a phased approach is not provided for in the final rule
because it would unduly delay the public availability of Rule 10c-1a
information and limit the initial benefits of the final rule.
---------------------------------------------------------------------------

    \253\ See infra note 688 and accompanying text.
    \254\ See Equilend Letter, at 1 (Data Explorers was acquired by
S&P Global and manages a dataset of over $37 trillion of global
securities from 20,000 institutional funds, and over three million
intraday transactions), available at https://www.spglobal.com/marketintelligence/en/mi/products/securities-finance.html.
---------------------------------------------------------------------------

    One commenter suggested excluding debt from the proposed rule,
particularly corporate debt and asset-backed securities, which the
commenter described as having small issuance sizes, diverse
characteristics, and a small number of lending transactions.\255\
However, information about loans on such securities will be beneficial
to lenders, investors, and regulators precisely because of such
characteristics. Data on such loans may be useful for lenders to assess
rates and for regulators and investors to understand the lending market
for such securities. For example, market participants will be able to
use the information made publicly available by the final rule and pool
such information across debt securities to help market participants
compare the terms of a loan of one debt security with loans of other
debt securities that have similar characteristics or time horizons.
Thus, including debt securities in the final rule will help improve the
ability of market participants to benchmark their loans of debt
securities.
---------------------------------------------------------------------------

    \255\ See RMA Letter, at 16.
---------------------------------------------------------------------------

    The Commission also received comment regarding the size of the debt
market. One commenter stated that ``[w]hile the number of publicly
traded equity securities of U.S. issuers is around 3,600, there are
over two million unique issuances of corporate and government bonds and
asset-backed securities in circulation.'' \256\ The same commenter
stated that utilization rates decrease as products become more
individualized and there is only a small market for shorting
bonds.\257\ Less liquid markets should benefit from the increased
transparency provided by the final rule because improving securities
lending transparency, even in the debt market, can lead to reduced
information asymmetry and increased pricing efficiency.\258\
---------------------------------------------------------------------------

    \256\ RMA Letter, at 16.
    \257\ See RMA Letter, at 16.
    \258\ See infra Part IX.C.1 (discussing how the final rule will
affect markets with low lending volume such as corporate bonds).
---------------------------------------------------------------------------

    One commenter suggested excluding government securities from the
proposed rule because ``there is sufficient liquidity and demand for
these securities on platforms and venues that have a high degree of
transparency,'' but did not provide details regarding the transparency
of the platforms and venues.\259\ As discussed below, in Part IX.B.2,
there is some transparency in the government securities lending market,
but some information may not be as timely or as robust (i.e., the data
may contain aggregated volume information) as under the final rule. The
final rule includes loans of U.S. Government securities between market
participants to help ensure that comprehensive and timely information
about these loans is made publicly available so that market
participants in the government securities lending market benefit from
increased transparency.
---------------------------------------------------------------------------

    \259\ RMA Letter, at 16.
---------------------------------------------------------------------------

    Some commenters requested clarification on whether ``crypto
assets'' or as some commenters referred to them, ``cryptocurrencies''
would be covered by proposed Rule 10c-1.\260\ A crypto asset, which is
also sometimes referred to as a ``digital asset,'' may meet the
definition of a ``security'' under the federal securities laws.\261\ As
defined in the final rule, paragraph 10c-1a(j)(3) applies to reportable
securities, which are securities for which transactions are reported to
the CAT, TRACE, and RTRS. Accordingly, if a crypto asset is a security
that meets one of these same criteria, the crypto asset is a reportable
security.
---------------------------------------------------------------------------

    \260\ See, e.g., James J. Angel Letter, at 5; Letter from Jay
Rivera (Mar. 2, 2022); Letter from Treveri Capital LLC (Dec. 22,
2021) (``Treveri Capital Letter''), at 1.
    \261\ See, e.g., Report of Investigation Pursuant to Section
21(a) of the Securities Exchange Act of 1934: The DAO, Release No.
34-81207 (July 25, 2017) (``DAO 21(a) Report''), available at
https://www.sec.gov/litigation/investreport/34-81207.pdf. See also
SEC v. W.J. Howey Co., 328 U.S. 293 (1946).
---------------------------------------------------------------------------

    One commenter believed that infrequent lending of debt securities
could result in a ``far greater risk of loss of anonymity and the use
of such data to anticipate or reverse engineer the trading of
competitors.'' \262\ The final rule's requirements for end-of-day
reporting of data elements and loan modification data elements in
paragraphs (c) and (d) and delaying the publication of loan amount and
modifications to loan amount in paragraph (g) should help reduce the
potential to anticipate and reverse engineer the trading of
competitors. In addition, paragraph (g)(4) of the final rule requires
that following the receipt of confidential information pursuant to
paragraph (e) ``an RNSA shall keep such information confidential, in
accordance with the provisions of paragraph (h) of this section and
applicable law.'' \263\ Further, 17 CFR 240.10c-1a(h)(4) (``final Rule
10c-1a(h)(4)'') requires that an RNSA ``[e]stablish, maintain, and
enforce reasonably designed written

policies and procedures to maintain the security and confidentiality of
confidential information required by paragraph (e) of this section.''
\264\ Thus, the only existing RNSA's experience with managing nonpublic
information, coupled with the explicit requirements for protecting
confidential information in paragraphs (g)(4) and (h)(4) of the final
rule, will help ensure that an RNSA implements data security measures
that will protect anonymity.
---------------------------------------------------------------------------

    \262\ RMA Letter, at 16.
    \263\ Final Rule 10c-1a(g)(4).
    \264\ Final Rule 10c-1a(h)(4).
---------------------------------------------------------------------------

E. Scope of Transactions Required To Be Reported--Rule 10c-1a(j)(2)

Proposed Rule
    The Commission proposed that any person that ``loans a security''
on behalf of itself or another person shall provide Rule 10c-1
information to an RNSA.\265\ The Commission did not define the term
``loans a security,'' but requested comment on whether a definition was
necessary.\266\ In the Proposing Release, the Commission stated its
preliminary belief that any person that loans a security on behalf of
itself or another person should be required to provide the material
terms to an RNSA to ensure that proposed Rule 10c-1 is appropriately
``designed to increase the transparency of information available to
brokers, dealers, and investors, with respect to the loan or borrowing
of securities.'' \267\
---------------------------------------------------------------------------

    \265\ See proposed Rule 10c-1(a).
    \266\ See Proposing Release, 86 FR 69808 (Question 8).
    \267\ See Proposing Release, 86 FR 69807. See also Public Law
111-203, sec. 984(b), 124 Stat. 1376 (2010).
---------------------------------------------------------------------------

Final Rule
    Many commenters requested clarification of the scope of securities
loan transactions to which the rule's reporting requirements would
apply.\268\ One commenter stated that the proposed rule sought to
regulate ``a host of transactions that do not involve the `loan or
borrowing of securities.' '' \269\ Other commenters recommended that a
definition of the term ``loans a security'' refer only to lending for a
particular purpose.\270\ Some of those commenters expressed concerns
about including data for loans that were not considered traditional
loans in the industry, particularly loans for which the parties did not
enter into a written contract or transfer collateral, and that such
loans might ``skew the data and negatively impact the utility of the
information provided.'' \271\ Other commenters recommended that the
final rule include a defined term for the types of transactions that
are covered by the rule.\272\
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    \268\ See, e.g., Fidelity Letter, at 2; SIFMA Letter 1, at 9;
Letter from Wim Mijs, CEO, European Banking Federation (Jan. 17,
2022) (``EBF Letter''), at 1; Citadel Letter, at 4.
    \269\ See Citadel Letter, at 12.
    \270\ See, e.g., CASLA Letter, at 2 (recommending ``a definition
of `securities loan' . . . based on the purpose of a loan'').
    \271\ See, e.g., BlackRock Letter, at 6-7.
    \272\ See, e.g., Fidelity Letter, at 2; Sharegain Letter, at 3;
Letter from Kenneth E. Bentsen, Jr., President and CEO, SIFMA (Apr.
1, 2022) (``SIFMA Letter 2''), at 3; Letter from Lindsey Weber
Keljo, Asset Management Group--Acting Head, SIFMA Asset Management
Group (Jan. 7, 2022) (``SIFMA AMG Letter''), at 9; CASLA Letter, at
2; EBF Letter, at 1; RMA Letter, at 14-15; IIB Letter, at 9; FIF
Letter, at 2-3.
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    To address commenters seeking greater clarity and commenters
recommending a definition as to what types of transactions are required
to be reported, the final rule includes a definition of the term
``covered securities loan'' to mean ``a transaction in which any person
on behalf of itself or one or more other persons, lends a reportable
security to another person,'' with certain exceptions.\273\ As
discussed below, in this part, the exceptions remove from the scope of
the final rule's reporting requirements certain clearing agency
positions \274\ and certain uses of margin securities by a broker or
dealer \275\ that are not consistent with, or traditionally recognized
as, securities lending transactions.
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    \273\ See final Rule 10c-1a(j)(2).
    \274\ See final Rule 10c-1a(j)(2)(ii).
    \275\ See final Rule 10c-1a(j)(2)(iii).
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    The Commission received a comment recommending that the term
``loans a security'' be limited to lending to unaffiliated
borrowers.\276\ Other commenters suggested that information on
securities lending transactions between affiliates not be disseminated
under the rule,\277\ with one stating that, ``loans between a broker-
dealer and its affiliates, may not represent the actual rates available
in the securities lending market and therefore could cause confusion
and lead to misinterpretation if published.'' \278\ The Commission does
not agree that it would be appropriate to exclude loans to affiliated
borrowers from the scope of the final rule. Inter-affiliate loans may
be arms-length transactions and excepting such loans would result in
the loss of data relevant to the lending market.\279\
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    \276\ See SIFMA AMG Letter, at 9 (recommending a definition of
the term ``loans a security'' to mean to ``enter into a transaction
in which one person, on behalf of itself or another person . . .
will temporarily lend to an unaffiliated person,'' among other
things).
    \277\ See, e.g., SIFMA Letter 1, at 15; RMA Letter, at 15; CASLA
Letter, at 2; IIB Letter, at 10.
    \278\ See SIFMA Letter 1, at 15. See also RMA Letter, at 15
(stating that ``inter-affiliate loans frequently do not represent
market prices and should be excluded from such dissemination'').
    \279\ To reduce any potential confusion and misinterpretation of
the data, an RNSA could determine to, if it is able, develop
methodologies to separate or identify such loans.
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    In addition, an exclusion for inter-affiliate loans could result in
market practices to circumvent reporting obligations. For instance, in
arranged financing, a broker or dealer ``may offer arranged financing
programs (sometimes called `enhanced lending' or `short arranging
products') through which a customer can borrow shares from the firm's
domestic or foreign affiliate and use those shares to close out a short
position in the customer's account.'' \280\ In describing arranged
financing, a market participant has stated that ``[w]ith respect to . .
. arranged financing/enhanced lending models at member firms, certain
ones may involve the loan of shares to customers from domestic
affiliates and others may involve the loan of shares to customers from
foreign affiliates.'' \281\ Thus, if the broker or dealer agrees to
provide a customer the covered securities loan through an affiliate,
such as a foreign affiliate, an exclusion for inter-affiliate loans
could exclude the securities loan entirely. Moreover, one researcher
has observed that ``owners of large portfolios . . . often conduct
their own lending programs with an affiliated agent lender . . . .''
\282\ An exclusion for inter-affiliate loans would not capture such
loans. Therefore, under the final rule a covered person is required to
report covered securities loans with affiliates.
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    \280\ See FINRA Regulatory Notice 21-19 (June 4, 2021),
available at https://www.finra.org/rules-guidance/notices/21-19.
    \281\ See, e.g., Robert Toomey, Managing Director, and Joseph
Corcoran, Managing Director, SIFMA, SIFMA Comment on Short Interest
Position Reporting Enhancements and Other Changes Related to Short
Sale Reporting (FINRA Regulatory Notice 21-19) (Sept. 30, 2010),
available at https://www.sifma.org/wp-content/uploads/2021/10/SIFMA-Comments-on-FINRA-RN-21-19-Final.pdf.
    \282\ See, e.g., BIS Working Papers No. 768: Over-the-Counter
Market Liquidity and Securities Lending, Nathan Foley-Fisher, et
al., Bank of International Settlement (Feb. 2019), available at
https://www.bis.org/publ/work768.pdf.
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    Certain commenters recommended that a definition of the term
``loans a security'' refer only to transactions made pursuant to a
written lending agreement \283\ or documented as a securities loan on
the lender's books

and records.\284\ One commenter stated that such an approach would
``ensure consistent reporting and avoid confusion and misinterpretation
of data by the public.'' \285\ Another commenter stated that it could
avoid ``the public dissemination of incomplete, inaccurate, and
misleading information that could have an adverse impact on the
securities lending market.'' \286\ The Commission disagrees that the
definition of the term ``covered securities loan'' should require that
the transaction be agreed to pursuant to a written securities lending
agreement such as the Master Securities Loan Agreement, or a
transaction documented as a securities loan on a lender's books and
records. Such a requirement could provide an easy way to avoid the
requirement, particularly for unregulated entities not otherwise
subject to documentation and books and records requirements. Moreover,
such a requirement could cause competitive harm to entities that are
subject to such requirements or who follow such practices as risk
management tools. Requiring the reporting of only securities loans made
pursuant to a written agreement or subject to a covered person's books
and records requirements would create confusion by introducing such
distinctions, which may be interpreted or applied differently across
the different types of persons that meet the definition of ``covered
person.'' Additionally, such requirements would result in data that
excludes reporting by covered persons that do not use written
agreements or have books and records requirements. Such gaps in the
data could contribute to the misinterpretation of data by the public,
instead of ameliorating it as the commenter suggests.\287\ Thus, the
final rule covers a wide variety of loans without limitation as to a
particular loan's design or structure by including all loans that occur
when a covered person ``agrees to a covered securities loan.'' \288\
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    \283\ See, e.g., SIFMA Letter 1, at 10; SIFMA AMG Letter, at 9;
RMA Letter, at 15; Federated Hermes Letter, at 2 (recommending to
``limit reporting only to traditional lending agreements made
pursuant to the Master Securities Loan Agreement''); S3 Partners
Letter, at 10-11.
    \284\ See, e.g., SIFMA Letter 1, at 3; SIFMA AMG Letter, at 9.
    \285\ See SIFMA Letter 1, at 3.
    \286\ SIFMA AMG Letter, at 2.
    \287\ See SIFMA Letter 1, at 3.
    \288\ See final Rule 10c-1a(a). The final rule's requirement
that a covered person who ``agrees to'' a covered securities loan
must report Rule 10c-1a information to an RNSA (or rely on a
reporting agent to do so) is designed to be broad regarding when a
securities loan is required to be reported. This is designed to
ensure that differently structured securities loans are captured by
the final rule to prevent evasion (e.g., by not including specific
characteristics, like a written agreement, that can be easily
avoided), and to prevent undue delay of reporting (e.g., by not
requiring that the loan be settled, which may take days or longer
after the material terms of a securities loan have been agreed to).
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    Some commenters recommended that the term ``loans a security''
specifically refer to the temporary lending of securities against a
transfer of collateral.\289\ One of the commenters stated that such a
provision would help ``ensure consistent reporting and avoid confusion
and misinterpretation of data by the public.'' \290\ Another stated
that defining the term ``loan of securities'' to include a transfer of
collateral would ``better achieve the Commission's goals'' by avoiding
``the public dissemination of incomplete, inaccurate, and misleading
information.'' \291\ Such a definition would have been consistent with
the Proposing Release's statement that a securities loan is typically a
fully collateralized transaction.\292\ However, the proposed rule did
not limit the application of its reporting requirements to securities
loans that were fully collateralized, as it was designed to capture all
loans of securities and provide a more complete and timely picture of
trading for securities loans.\293\ While the provision of collateral is
currently a common industry practice for securities loans, it is not
necessarily a characteristic of all securities loans. For example, some
lenders may structure securities loans to include a bank guaranty,
insurance policy, or other credit enhancement in lieu of
collateral.\294\ Therefore, limiting the scope of loans covered by the
final rule to only include lending against a transfer of collateral
could leave certain loans out of the scope of the final rule's
reporting requirements. The exclusion of uncollateralized loans could
decrease the availability of pricing and activity information in the
securities lending market, resulting in the reporting and dissemination
of incomplete, inaccurate, and misleading information for which the
commenters voiced concern.\295\ Furthermore, the reporting of
uncollateralized loans would provide additional data to market
participants, and would not result in misleading duplicative
information like other types of transactions that are discussed below
in this part (e.g., loans arising from certain clearing agency
services). Additionally, such a restriction could incentivize market
participants to use credit enhancement mechanisms that differ from
collateral (e.g., bank guaranties or insurance policies) in order to
avoid the final rule's reporting requirements. Therefore, the scope of
final Rule 10c-1a's reporting requirements is not limited to only
include loans against a transfer of collateral.\296\
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    \289\ See, e.g., SIFMA Letter 1, at 16; SIFMA AMG Letter, at 9;
RMA Letter, at 15.
    \290\ See SIFMA Letter 1, at 3.
    \291\ See SIFMA AMG Letter, at 2.
    \292\ See Proposing Release, 86 FR 69804.
    \293\ See Proposing Release, 86 FR 69812.
    \294\ See, e.g., 17 CFR 240.15c3-3(b)(3)(iii) (``Rule 15c3-
3(b)(3)(iii)'') (stating that a broker or dealer borrowing fully
paid or excess margin securities ``[m]ust provide to the lender,
upon the execution of the agreement or by the close of the business
day of the loan if the loan occurs subsequent to the execution of
the agreement, collateral, which fully secures the loan of
securities, consisting exclusively of cash or United States Treasury
bills and Treasury notes or an irrevocable letter of credit issued
by a bank'').
    \295\ See SIFMA AMG Letter, at 2; SIFMA Letter 1, at 3.
    \296\ But see supra note 148 (discussing requirements for the
provision of collateral by borrowers in the instance of fully paid
and excess margin securities).
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    One commenter recommended that the Commission limit the scope of
the rule's reporting requirements to securities loans where a lender
seeks to earn compensation or a return from the transaction.\297\ The
commenter stated that, ``[l]imiting the scope in such a way would help
focus reporting on primary transactions of interest, where the borrower
is seeking to `gain access to the security itself,' and distinguish it
from repurchase and other agreements, which are `typically used for
short-term financing.' '' \298\ Another commenter proposed limiting the
scope of securities loans to transactions in which a borrower obtains
use of the securities for a fee.\299\ However, a limitation of the
final rule's reporting requirements to only securities loans made by a
lender seeking to earn compensation or a return from the transaction,
or for a fee could potentially result in evasion, as securities loans
could be structured (e.g., via over-collateralization, haircuts, or use
of non-cash collateral with varying maturities, credit ratings, or
income characteristics) to avoid the identification of a fee. At the
very least, such a requirement could result in confusion or
inconsistent reporting as market participants may interpret differently
the loan structures that incorporate a fee or are made by lenders

seeking to earn compensation or a return from the transaction. If the
final rule only applied to securities loans agreed to for compensation,
a fee, or for the purpose of earning a return, securities loans made to
affiliates could be structured to fall outside the final rule's
reporting requirement (i.e., made without an expectation of return or
for no fee), while a loan still would have occurred, and the affiliate
would still benefit from possession of the loaned securities. Further,
the final rule does not exclude securities loans based on the purpose
or duration of the loan, such as for ``short-term financing,'' in order
to capture a wide variety of loans regardless of purpose or duration.
Finally, the final rule provides that a covered securities loan is a
transaction in which a person lends a reportable security, which
distinguishes covered securities loans from other agreements.
---------------------------------------------------------------------------

    \297\ See, e.g., ABA Letter, at 3 (recommending ``[t]he SEC
should define covered securities lending transactions to those where
the lender is seeking to earn compensation from the transaction'').
    \298\ See ABA Letter, at 3-4 (quoting the Proposing Release, 86
FR 69844 n.246). See also infra in this part, a discussion of final
Rules 10c-1a(j)(2)(iii) and (j)(2)(iii)(A) and the exclusion from
the final rule's reporting requirements of certain uses of margin
securities by a broker or dealer, which can include ``funding
trades,'' repurchase agreements, and uses of margin securities that
are not a loan to another person (e.g., rehypothecation).
    \299\ See BlackRock Letter, at 7 (recommending ``the SEC should
limit the scope to traditional securities lending transactions where
the parties have entered into the loan transaction in order for a
borrower to obtain use of the securities for a fee'').
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    Multiple commenters were concerned that the proposed rule would
require that short sales or short positions be reported as securities
loans. Such commenters requested clarification of whether the proposed
rule would treat short sales as loans of securities.\300\ To provide
such clarification, under the final rule covered persons will not be
required to report short sales as defined by 17 CFR 242.200(a) (``Rule
200(a)''),\301\ but will be required to report loans that are used for
short sales.
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    \300\ See Citadel Letter, at 4 (stating that ``[t]he scope of
the Commission's proposal is unclear'' and that ``[c]ustomer short
sales . . . are not typically documented under securities lending
agreements, booked as securities loans, or treated as securities
loans for financial reporting purposes''); See also Fidelity Letter,
at 3 (stating that ``inclusion of short positions in the required
reporting . . . would be inappropriate from a securities lending
market perspective, as well as potentially misleading, as it could
result in inaccurate double counting of loans''); IHS Markit Letter,
at 3 (stating that securities loans and short sales ``are two
separate and distinct markets with different drivers, participants,
and data points and should not be conflated''); SIFMA Letter 1, at
9-12 (recommending that the Commission exclude short positions from
the scope of loans required to be reported to an RNSA); AIMA Letter
1, at 3-4; Letter from Ji[rcaron][iacute] Kr[oacute]l, Deputy CEO,
Global Head of Government Affairs, Alternative Investment Management
Association (Apr. 1, 2022) (``AIMA Letter 2''), at 3 (short
positions would be reported under the rule proposed by the
Commission pursuant to section 929X of the Dodd-Frank Act); Letter
from Richard Karoly, Managing Director, Legal, Charles Schwab & Co.,
Inc. (Jan. 7, 2022) (``Charles Schwab Letter''), at 1-2 (short
positions are already reported under other reporting regimes such as
FINRA's Rule 4560. Short-Interest Reporting); MFA Letter 3, at 4
(stating that the Commission should ``distinguish short positions
from stock loans''). The Commission agrees with commenters who
stated that short positions are not subject to a written securities
lending agreement, nor carried on a firm's books and records as
securities loans, nor treated as securities loans for financial
reporting purposes. See, e.g., FIF Letter, at 2-3; See also SIFMA
AMG Letter, at 5 (stating that short positions are ``similar in some
respects but are outside of the securities lending activity''
targeted by the proposed rule).
    \301\ Rule 200(a) provides, ``The term short sale shall mean any
sale of a security which the seller does not own or any sale which
is consummated by the delivery of a security borrowed by, or for the
account of, the seller.''
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    The Commission stated in the Proposing Release that it was not
proposing to include repurchase and sale agreements (commonly known as
``repos'') within the scope of the proposed rule because section 984 of
the Dodd-Frank Act focuses on the loan or borrowing of securities.\302\
The Proposing Release detailed distinctions between the typical
securities lending and repo markets, including that repos typically are
primarily used for short-term financing while other securities loans
typically are used to gain access to the security itself, and that
loans generally allow the lender to recall the security on demand while
repos do not.\303\ Some commenters agreed with the Commission,
recommending that repos should not fall within the meaning of the term
``loans a security'' in the proposed rule.\304\ One commenter suggested
that loans of a security should be distinguished from repos.\305\
However, one commenter stated that there is ``significant overlap in
the functionality between repos and securities lending transactions.''
\306\ The commenter also suggested ``a broad anti-evasion provision
that prohibits any person from engaging in any practice intended to
evade the rule's reporting requirements.'' \307\ The same commenter
recommended defining the term ``securities loan'' to include
repos.\308\ The Office of Financial Research (``OFR'') recently
proposed a rule to collect data on repos.\309\ Accordingly, at this
time, it is not necessary to include repos within the scope of the
final rule's information reporting requirements, as a potential OFR
rule, if adopted, could address any potential reporting gaps, thereby
reducing the incentives to evade final Rule 10c-1a.
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    \302\ See Proposing Release, 86 FR 69803 n.2.
    \303\ See Proposing Release, 86 FR 69843 n.246.
    \304\ See, e.g., SIFMA Letter 1, at 9 (noting that ``the
Commission is not intending to include within the scope of the
Proposed Rule the entry into repurchase agreements, which we believe
is the proper approach''); SIFMA Letter 2, at 3; BlackRock Letter,
at 2 (describing securities lending market trades as ``transactions
whereby a lender lends securities to a borrower in exchange for
collateral but excluding repurchase transactions where the purpose
of the trade is to provide cash financing in exchange for non-cash
collateral'').
    \305\ See ABA Letter, at 3-4 (stating that ``[t]he SEC should
define covered securities lending transactions . . . and distinguish
it from repurchase and other agreements'').
    \306\ See Better Markets Letter, at 10. See also James J. Angel
Letter, at 6-7.
    \307\ See Better Markets Letter, at 10. See also S3 Partners
Letter, at 11 (expressing concern with securities lending
transactions being repapered as repos); James J. Angel Letter, at 7
(stating that ``[t]he final rule needs to define securities lending
in such a way that it deters such evasion, while not ensnaring
normal repo in the reporting requirements'').
    \308\ See Better Markets Letter, at 10 (``Accordingly the SEC
should consider . . . a definition of `securities loan' or
`securities lending' that will ensure sufficient coverage of
relevant transactions, i.e., those where securities are temporarily
transferred from one party to another, for compensation, with a
commitment to return those securities in the future'').
    \309\ See, e.g., OFR Factsheet: OFR's Proposed Data Collection
(Mar. 2023), available at https://www.financialresearch.gov/data/files/NCCBR_factsheet.pdf; Office of Financial Research Releases
Proposal to Collect Data on Certain Repo Transactions (Jan. 5,
2023), available at https://www.financialresearch.gov/press-releases/2023/01/05/office-of-financial-research-releases-proposal-to-collect-data-on-certain-repo-transactions.
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    The Commission also received comment requesting that the final rule
``make clear that the novation and processing of a securities lending
transaction by a registered clearing agency does not give rise to a new
loan or the modification of an existing loan subject to reporting under
Rule 10c-1.'' \310\ The same commenter also stated that ``[n]ovation is
. . . the legal mechanism through which NSCC guarantees to each
counterparty the performance of the obligations under a transaction
that the counterparties already negotiated and executed away from the
NSCC and that was already subject to a reporting obligation.'' \311\
Another commenter directly responded to the Proposing Release's request
for comment asking whether the Commission should define what it means
to ``loan a security.'' \312\ The commenter stated that the definition
should ``expressly exclude loan positions that result from the central
counterparty novation function that a clearing agency like OCC provides
to securities loans.'' \313\ The commenter, which is an SEC-registered
clearing agency, also stated that it ``does not have access to the
majority of information sought under proposed Rule 10c-1 . . . and,
therefore could not report such information to an RNSA.'' \314\ The
Commission agrees with the commenters' recommendations that positions
that result from central counterparty services by a clearing agency,
including the novation and processing of a securities lending
transaction, should not give rise to any

reporting obligation under the final rule, including the requirement to
report loan modification data elements under paragraph (d) of the final
rule. As discussed above, in Part VII.A, clearing agencies providing
the functions of a central counterparty or central securities
depository do not lend or borrow shares on their own behalf, but
instead novate or process the loans of lenders and borrowers (i.e.,
central counterparty or central securities depository services) for the
purpose of efficient clearance and settlement.\315\ Although novation
of the loan by the clearing agency technically creates a new loan in
which the clearing agency would step into the shoes of the
counterparties,\316\ the clearing agency would not be modifying the key
terms of the loan (other than changing the identities of the
counterparties to that of the clearing agency), such as the rate or
size, and requiring clearing agencies to report such loans would result
in the misleading appearance of additional loan volume containing
otherwise duplicative loan information.\317\ Therefore, the final rule
excludes from the ``covered securities loan'' definition ``a position
at a clearing agency that results from central counterparty services
pursuant to Rule 17Ad-22(a)(2) of the Exchange Act or central
securities depository services pursuant to Rule 17Ad-22(a)(3) of the
Exchange Act.'' \318\
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    \310\ See DTCC Letter, at 3; See also OCC Letter, at 10.
    \311\ See DTCC Letter, at 4.
    \312\ See Proposing Release, 86 FR 69808 (Question 8).
    \313\ See OCC Letter, at 12.
    \314\ See OCC Letter, at 12.
    \315\ See DTCC Letter, at 1 (stating that the ``processing of a
securities loan transaction, including through novation and netting,
does not constitute a modification or a new transaction for
reporting purposes. Such processing does not constitute new market
activity or modify the material economic terms of the transaction,
which the parties will have already reported'' and that ``[n]ovation
is simply the legal mechanism through which NSCC guarantees to each
counterparty the performance of the obligations under a transaction
that the counterparties already negotiated and executed away from
NSCC and that was already subject to a reporting obligation'').
    \316\ Under Rule 17Ad-22(a)(2), a clearing agency performs the
functions of a central counterparty when it interposes itself
between the counterparties to securities transactions, acting
functionally as the buyer to every seller and the seller to every
buyer.
    \317\ See final Rule 10c-1a(j)(2)(ii). If a clearing agency
acted on behalf of the beneficial owner of the loaned security to
effect a covered securities loan, then the clearing agency would be
a ``covered person'' under paragraph (j)(1)(i) of the final rule.
    \318\ See final Rule 10c-1a(j)(2)(ii).
---------------------------------------------------------------------------

    The Commission also received a comment stating that ``it is not
uncommon for a lending agent to pool together available supply of a
given security across multiple lenders in their lending program'' to
satisfy a large loan of securities and reallocate such loan among the
lenders in the program, as the inventory of individual lenders changes,
to avoid recalling a loan.\319\ The commenter also stated that, in such
instances, ``[g]iven no change in the economics of the trade or any
physical movement of securities, these intraday record entries are not
market trades and should not be reported as such.'' \320\ However, the
proposed rule did not limit its information reporting requirements to
securities loans arising from ``market trades'' or the ``physical
movement of securities,'' neither of which the commenter has defined or
described in the context of the securities lending market. Changing the
party or parties to a covered securities loan, which is required to be
confidentially reported under 17 CFR 240.10c-1(e)(1) (``final Rule 10c-
1a(e)(1)''), creates a new covered securities loan that would require
reporting as a new covered securities loan to an RNSA under final Rule
10c-1a(a)(1), and not as a modification under final Rule 10c-1a(d). The
identity of the lender or lenders is a material term of a covered
securities loan.\321\ The identity of the lender is not made public,
but is important information for regulatory purposes, such as
surveillance of activity pertaining to the individual loan.\322\
Whether the parties to a covered securities loan change for purposes of
the reporting requirements under final Rule 10c-1a(e)(1) depends on how
a pool \323\ or lending program is structured (e.g., whether the pool
or lending program itself or the individual underlying participants are
the party or parties identified as the lender for the loan). For
example, if a lending program as an individual entity is the party that
is the lender of the covered securities loan, changes to the underlying
participants, inventory providers, or customers of that lending program
will not constitute a change to the parties of the covered securities
loan. In that instance, unlike the lending program, the individual
participants will not be lenders directly to the borrower of the
covered securities loan. In that case, where a covered securities loan
remains open and the only change that occurs is a reallocation among
the pool's underlying constituents, that is not a change that will
require reporting as a new covered securities loan or as a modification
under paragraph (d) because there will be no change to a data element
in paragraph (c) of the final rule.
---------------------------------------------------------------------------

    \319\ See BlackRock Letter, at 7. See also, SIFMA AMG Letter, at
10 (stating that ``for bulk loans, reporting at the lending agent
level rather than the beneficial owner would reflect the actual
market loan and would avoid the reporting of loan components which
may shift throughout the allocation process'').
    \320\ BlackRock Letter, at 7.
    \321\ See final Rule 10c-1a(e)(1).
    \322\ If the covered person is a pool (and thus is a lender of
covered securities), it is the pool that is required to be
confidentially reported as the party to the covered securities loan
pursuant to final Rule 10c-1a(e)(1). See also Proposing Release, 86
FR 69804 (``The data elements provided to an RNSA . . . are also
designed to provide the RNSA with data that could be used for
important regulatory functions, including facilitating and improving
its in-depth monitoring of member activity and surveillance of
securities markets.'').
    \323\ The term ``pool'' is used here in the same manner it is
described by the commenter quoted above in this paragraph. See
BlackRock Letter, at 6-7 (also using the term ``pooled pass-through
account'').
---------------------------------------------------------------------------

    However, if the multiple, individual participants are all parties
identified as lenders to the loan, with no lending program or other
entity interposed between them and the borrower, a change in their
composition (the removal or addition of a lender) would constitute an
assignment of the loan and therefore would require reporting as a new
loan pursuant to final Rule 10c-1a(a)(1). Whether a reallocation of a
loan among participants in a lending program requires the reporting of
a new covered securities loan depends upon the facts and circumstances,
including the structure of such lending program.
    One commenter recommended a definition of the term ``loans a
security'' that would apply at a minimum ``any time the lender loses
the right to vote the securities during the time of the loan.'' \324\
Voting rights do not provide an adequate criterion to define what a
securities loan is because not all reportable securities necessarily
carry voting rights (e.g., some preferred stock, options, fixed-income
securities, and treasuries). However, the facts and circumstances,
including the loss of voting rights, may be an indicator as to whether
a transaction is a loan.
---------------------------------------------------------------------------

    \324\ See Morningstar Letter, at 4.
---------------------------------------------------------------------------

    The Commission also received comment letters expressing support for
limiting the reporting required under the proposed rule to the
Wholesale market \325\ of the securities lending market.\326\ Some
commenters

recommended narrowing the scope of loans to the Wholesale market due to
what they characterized as potential negative effects on short selling
from data that could be revealed through loans in the Customer
market.\327\ One of the commenters stated that ``immediately publicly
disclosing short selling activity would signal to all other market
participants that a short position is being established.'' \328\ Such
concerns are largely addressed by requiring that an RNSA delay public
disclosure of the loan amount by 20 business days. This modification
should significantly reduce the novelty of the information disseminated
under the final rule regarding short sellers' positions, such that it
is less timely than pre-existing sources of short selling transparency,
such as FINRA's bimonthly short interest data.
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    \325\ Traditionally, securities lending and borrowing
transactions have been conducted on a bilateral basis. Generally,
when an end investor wishes to borrow securities, and its broker-
dealer does not have those securities available in its own inventory
or through customer margin accounts to loan, the broker-dealer will
borrow the securities from a lending agent with whom it has a
relationship. The broker-dealer will then re-lend the securities to
its customer. Loans from lending programs to broker-dealers occur in
what is referred to by market participants as the Wholesale market,
while loans from a broker-dealer to the end borrower occur in what
is referred to by market participants as the Customer market (also
known as the ``retail market''). See Proposing Release, 86 FR 69805.
For purposes of this release, this market is referred to as the
Customer market. See supra Part II.
    \326\ See AIMA Letter 1, at 2; AIMA Letter 2, at 3; Citadel
Letter, at 11; SBAI Letter, at 2; Letter from John L. Thornton, Co-
Chair, Hal S. Scott, President, R. Glenn Hubbard, Co-Chair,
Committee on Capital Markets Regulation (Jan. 6, 2022) (``CCMR
Letter''), at 2.
    \327\ See CCMR Letter, at 2; AIMA Letter 1, at 2.
    \328\ See AIMA Letter 1, at 2. See also Letter from
Ji[rcaron][iacute] Kr[oacute]l, Deputy CEO, Global Head of
Government Affairs, Alternative Investment Management Association
(Aug. 11, 2023) (``AIMA Letter 3''), at 4 (stating that ``[b]y
including loans used to effect short sales in the Securities Lending
Proposal, the Commission will be making it more expensive to engage
in short selling'').
---------------------------------------------------------------------------

    Another commenter suggested that retail loans may not be structured
as securities lending, but rather structured as brokerage agreements,
and thus may not be suitable for standardized data collection.\329\
This commenter may be referring to the use of margin securities by a
broker or dealer in which the broker or dealer does not lend such
margin securities to another person (e.g., a rehypothecation).\330\ The
final rule's exclusion of such uses from the definition of ``covered
securities loan,'' as discussed below, in this part, should address the
commenter's concern.
---------------------------------------------------------------------------

    \329\ See SBAI Letter, at 2.
    \330\ See also James J. Angel Letter, at 4 (asking ``when and
how are loans from customer margin accounts to be reported?'').
---------------------------------------------------------------------------

    A commenter stated that the Commission had not fully explained why
greater transparency, or transaction-by-transaction data, in the
Customer market would be valuable.\331\ More broadly, limiting data to
Wholesale market loans would significantly reduce the benefits of the
rule stemming from increased transparency into the securities lending
market. In the Proposing Release, the Commission stated that the rule
``is designed to address . . . inefficiencies in the securities lending
market by making more comprehensive information regarding securities
lending transactions publicly available, which could better protect
investors by eliminating certain information asymmetries.'' \332\ Data
regarding Customer market loans will, for example, provide end-
borrowers with valuable information as to the competitiveness of the
rates they are being charged for their loans. Such data will also
provide information to customers that have agreed to loan their fully
paid securities as to the competitiveness of the rates they are
receiving from brokers or dealers borrowing such securities. Excluding
such a fundamental part of the securities lending market from the scope
of transactions to which the rule's reporting requirements apply is
inconsistent with the Commission's stated goal of making comprehensive
information regarding securities loans publicly available. Therefore,
the definition of ``covered securities loan'' in the final rule does
not distinguish between the Wholesale market and Customer market and is
not limited to Wholesale market transactions.
---------------------------------------------------------------------------

    \331\ See Citadel Letter, at 9 (using the term ``Retail Market''
in place of Customer market). But see Better Markets Letter, at 4
(stating that ``high short interest can lead to a destabilizing
short squeeze, which can in turn lead to significant volatility in
the price of the shorted stock, if not the broader markets . . . If
regulators and the public had better and more timely information
about the amount of shares of . . . meme stocks that had been lent
and borrowed, they may have been able to proactively head off or
mitigate the impact of the destabilizing events of January 2021
before they occurred''). See also infra Part IX.C.2 (discussing the
potential implications of the provision of securities lending
activity to market participants in and around the market events of
January 2021).
    \332\ See Proposing Release, 86 FR 69807.
---------------------------------------------------------------------------

    One commenter recommended that the term ``loans a security''
specifically refer to securities loaned ``for a permitted purpose
pursuant to Regulation T of the Board of Governors of the Federal
Reserve System.'' \333\ However, limiting the final rule's reporting
requirements to only securities loans made for permitted purposes
pursuant to Regulation T of the Board of Governors of the Federal
Reserve System, would be overly narrow as the principal purpose of
Regulation T is to regulate extensions of credit by brokers and
dealers.\334\ As the commenter states, the ``permitted purposes''
contemplated under section 220.10(a) of Regulation T are limited to
``allowing the borrower to make delivery of the borrowed securities in
the case of short sales, failure to receive securities required to be
delivered, or other similar situations.'' \335\ Regulation T states
that ``[i]ts principal purpose is to regulate extensions of credit by
brokers and dealers; it also covers related transactions within the
Board's authority under the Act. It imposes, among other obligations,
initial margin requirements and payment rules on certain securities
transactions.'' \336\ However, the securities loan market includes
lenders other than brokers and dealers and may involve loans of
securities for purposes other than short sales, failures to receive
securities required to be delivered, and similar situations.\337\
Furthermore, the purpose of final Rule 10c-1a is to increase the
transparency of information available to broker, dealers, and
investors, with respect to the loan and borrowing of securities without
limitation to the purpose of the loan or borrow, whereas the stated
purpose of Regulation T is regulating extensions of credit. Thus,
Regulation T does not provide an appropriate framework to limit final
Rule 10c-1a's information reporting requirements.
---------------------------------------------------------------------------

    \333\ See SIFMA AMG Letter, at 9.
    \334\ 12 CFR 220.10(a) (``Regulation T'').
    \335\ See SIFMA AMG Letter, at 9 (quoting section 220.10(a) of
Regulation T).
    \336\ 12 CFR 220.10(a).
    \337\ For example, it is the Commission's understanding that
securities are borrowed by banks managing liquidity on their balance
sheet and financial entities obtaining the type of collateral
required by other agreements they are trying to enter into, and that
some investors may lend and borrow securities to obtain certain tax
treatment for dividends and dividend substitutes. See Proposing
Release, 86 FR 69831.
---------------------------------------------------------------------------

    The Commission also received comment expressing support for a de
minimis threshold for reporting loans of securities.\338\ In some
contexts, reporting thresholds may be useful to reduce burdens on
persons required to report, or to reduce the possibility that
strategies or identities of reporters will be revealed. However, a de
minimis reporting threshold is not necessary in light of modifications
from the proposed rule to require end-of-day \339\ (versus 15 minute)
reporting, as well as the delay \340\ in publication of size
information,\341\ which are expected to reduce the possibility that
strategies or identities of reporting entities will be revealed.
Including a de minimis threshold, which would primarily affect data for
smaller securities loans, could provide the public with a distorted
view of securities loan activity. For example, a large volume of
relatively small securities loans could constitute a significant amount
of the overall lending activity for an individual security.
Alternatively, a single, small securities loan could constitute the
only outstanding loan for an issuer, and its

exclusion would leave market participants without information about the
lending market for the security. The Proposing Release stated that
``granular information about certain material terms of securities
lending transactions would allow investors, including borrowers and
lenders, to evaluate not only the rates for such transactions, but also
any signals that such rates provide.'' \342\ The public disclosure of
information for securities lending transactions of all sizes will help
improve price discovery in the securities lending market.\343\
Additionally, providing a de minimis threshold could result in
avoidance of the final rule's reporting requirements if industry
participants structure otherwise reportable securities loans into
smaller tranches in order to fit below a reporting threshold.
---------------------------------------------------------------------------

    \338\ See Federated Hermes Letter, at 2.
    \339\ See, e.g., 17 CFR 240.10c-1a(c)(6) (``final Rule 10c-
1a(c)(6)'').
    \340\ See final Rule 10c-1a(g)(2).
    \341\ See final Rule 10c-1a(c).
    \342\ See also Proposing Release, 86 FR 69804.
    \343\ See infra Part IX.C.1 (stating that ``increased
information will result in benefits in the form of . . . improved
market stability and price discovery both in the securities lending
market and the market for the underlying security''). See also
Proposing Release, 86 FR 69804.
---------------------------------------------------------------------------

    The Commission received a comment recommending that the final rule
not capture a ``broker-dealer hypothecation of customer margin \344\
securities.'' \345\ Another commenter stated that it understood the
proposed rule to exclude rehypothecation of a customer's margin
securities.\346\ When a broker or dealer hypothecates (or uses)
customer margin securities, the customer is not loaning them to the
broker or dealer as the customer has already pledged the securities in
a margin account to the broker or dealer, as collateral for a margin
loan.\347\ Accordingly, the final rule excludes hypothecation of
securities, but provides that the loan of such customer margin
securities by a broker or dealer to another person is a covered
securities loan.\348\ Specifically, the definition of the term
``covered securities loan'' under the final rule includes the provision
that, ``the use of margin securities, as defined in Rule 15c3-3(a)(4)
of the Exchange Act, by a broker or dealer will not be a covered
securities loan for purposes of this rule.'' \349\ It also provides
that ``if a broker or dealer lends such margin securities to another
person, the loan to the other person is a covered securities loan'' for
purposes of the final rule.\350\ Therefore, should a broker or dealer
use a customer's margin securities for purposes other than to lend them
to another person, such a transaction would not fall within the
definition of the term ``covered securities loan'' under the final
rule. Additionally, if a broker or dealer borrows fully paid or excess
margin securities from a customer, that loan is a covered securities
loan,\351\ and the broker or dealer borrowing the fully paid securities
is responsible for reporting the loan to an RNSA.\352\
---------------------------------------------------------------------------

    \344\ Margin securities are securities carried for the account
of a customer in a margin account, as well as securities carried in
any other account other than securities that are fully paid
securities. See 17 CFR 240.15c3-3(a)(3) (``Rule 15c3-3(a)(3)'') and
Rule 15c3-3(a)(4) of the Exchange Act defining the terms ``fully
paid securities'' and ``margin securities.''
    \345\ See SIFMA AMG Letter, at 5.
    \346\ See SIFMA Letter 1, at 9 n.39.
    \347\ This distinction is made only within the context of a
broker or dealer's hypothecation (or rehypothecation) of customer
margin securities. It does not imply that a hypothecation or use of
securities in a different context could not constitute a loan of
securities.
    \348\ See final Rule 10c-1a(j)(2)(iii);17 CFR 240.10c-
1a(j)(2)(iii)(A) (``final Rule 10c-1a(j)(2)(iii)(A)'').
    \349\ See final Rule 10c-1a(j)(2)(iii).
    \350\ See final Rule 10c-1a(j)(2)(iii)(A).
    \351\ A broker or dealer must maintain the physical possession
or control of all fully paid securities and excess margin securities
carried by the broker or dealer for the accounts of customers. See
17 CFR 240.15c3-3(b)(1) (``Rule 15c3-3(b)(1)''). Additionally, a
broker or dealer must enter into a written agreement pursuant to
Rule 15c3-3(b)(3) in order to not be deemed to be in violation of
the provisions of Rule 15c3-3(b)(1) when borrowing fully paid or
excess margin securities from any person. See Rule 15c3-3(b)(3).
    \352\ See final Rule 10c-1a(j)(1)(iii).
---------------------------------------------------------------------------

    The Commission also received comment recommending that the final
rule not apply to ``funding trades.'' \353\ The commenter further
stated its belief that such transactions, which are defined as loans of
cash against securities being pledged as collateral, are not the type
of activity that should be captured through the proposed rule.\354\ To
the extent that such funding transactions constitute a use of margin
securities by a broker or dealer pursuant to paragraph (j)(2)(iii),
they would not fall within the final rule's definition of ``covered
securities loan.'' Otherwise, commenters were not specific as to
whether there would be variations of transactions used to ``fund
trades.'' The final rule does not specifically exclude transactions to
``fund trades.'' Whether a transaction to ``fund trades'' is a covered
securities loan will depend on the facts and circumstances of each
transaction.\355\
---------------------------------------------------------------------------

    \353\ See SIFMA AMG Letter, at 5. See also SIFMA Letter, at 15;
BlackRock Letter, at 7 (stating that ``the SEC should limit the
scope to traditional securities lending transactions where the
parties have entered into the loan transaction in order for a
borrower to obtain use of the securities for a fee, rather than to
provide a lender with cash financing that is collateralized with
non-cash collateral'').
    \354\ See SIFMA AMG Letter, at 9 (stating that ``[a] `non-
purpose' transfer of securities against cash collateral,
economically resembles a borrowing of cash by the security's
`lender' against a pledge of securities collateral to the securities
`borrower.' However, such transactions are more properly categorized
as `funding' transactions (as loans of cash against securities being
pledged as collateral) and, therefore, are not the type of activity
SIFMA AMG believes the SEC is, or should be, seeking to capture
through the Proposed Rule.'').
    \355\ See final Rule 10c-1a(j)(2)(i).
---------------------------------------------------------------------------

    After considering commenters' concerns and perspectives regarding
the proposed scope of transactions for which proposed Rule 10c-1
reporting would have been required, the final rule defines the term
``covered securities loan'' to mean ``[a] transaction in which any
person on behalf of itself or one or more other persons, lends a
reportable security to another person.'' \356\ Further, in paragraph
(a) of the final rule, the term ``loans a security'' is replaced with
the phrase ``agrees to a covered securities loan'' in its reporting
requirement for covered persons.\357\ In response to commenters'
request for clarification as to whether a loan should be reported
before or after it is settled, the term ``agrees to'' clarifies that
covered securities loans are required to be reported after the parties
agree to the loan, which is before settlement.\358\
---------------------------------------------------------------------------

    \356\ See final Rule 10c-1a(j)(2)(i).
    \357\ See final Rule 10c-1a(a).
    \358\ See HMA Letter, at 9 (recommending that reporting should
include effected, but not-yet-settled loans, and stating that ``the
Commission and FINRA rules have long required reporting of
securities orders, modification, and trades, not just settled
transactions, because all of that information is relevant to
understanding the markets''). But see Fidelity Letter, at 2
(requesting that the Commission clarify when a loan can be
considered ``effected'' for purposes of report, and stating that
``in the marketplace, a securities loan is not considered `effected'
by the parties until the loan has been contractually booked and
settled'').
---------------------------------------------------------------------------

    For the reasons described above, in this part, the definition of
the term ``covered securities loan'' in the final rule further provides
that ``a position at a clearing agency that results from central
counterparty services pursuant to Rule 17Ad-22(a)(2) of the Exchange
Act or central securities depository services pursuant to Rule 17Ad-
22(a)(3) of the Exchange Act will not be a covered securities loan for
purposes of this rule.'' \359\ The final rule also provides that ``the
use of margin securities, as defined in Rule 15c3-3(a)(4) of the
Exchange Act, by a broker or dealer, will not be considered a covered
securities loan for purposes of this rule,'' provided, however, that
``if a broker or dealer loans such margin securities, such loan will be
considered a covered securities loan for purposes of this rule.'' \360\
---------------------------------------------------------------------------

    \359\ See final Rule 10c-1a(j)(2)(ii).
    \360\ See final Rule 10c-1a(j)(2)(iii).
---------------------------------------------------------------------------

    The definition of the term ``covered securities loan,'' in
conjunction with the definition of the term ``reportable security,''
discussed above, in Part VII.D,\361\ sets forth the scope of the final

rule and distinguishes ``covered securities loans'' from other types of
transactions that are not required to be disclosed under final Rule
10c-1a. The final rule's definition of the term ``covered securities
loan'' will facilitate the public availability of information regarding
securities lending transactions. The definition's scope, encompassing
transactions in which any person, on behalf of itself or one or more
other persons, lends a reportable security to another person, is
designed to provide market participants, the public, and regulators
with information that broadly captures activity in the securities
lending market. The defined scope of transactions required to be
reported to an RNSA under final Rule 10c-1a will contribute to better
decision-making by investors, reduced costs of business for brokers or
dealers, improved performance and reduced costs for lending programs,
new business opportunities for data vendors, improvements to
shareholder monitoring, and improved market stability and price
discovery in the securities lending market.\362\ Additionally, the
exceptions to the definition of ``covered securities loan'' under the
final rule should help prevent the double counting of securities loans
and support the integrity of publicly available data by excluding
redundant and potentially misleading information.
---------------------------------------------------------------------------

    \361\ See final Rule 10c-1a(j)(3).
    \362\ See infra Part IX.C.1.
---------------------------------------------------------------------------

F. Information To Be Provided to an RNSA

    To facilitate transparency of the securities lending market, the
Commission proposed Rules 10c-1(b) through (e) to require certain loan-
level data elements (i.e., specified material terms of securities
loans) to be provided to an RNSA.\363\ Because an RNSA would be
required to implement rules regarding the format and manner to
administer the collection of information,\364\ proposed Rule 10c-1
lists the data elements that persons would be required to provide to an
RNSA, but does not specify granular instructions for data elements or
the formatting required for submission of the information to an
RNSA.\365\
---------------------------------------------------------------------------

    \363\ While pricing-related data elements regarding
collateralized loans were included in the loan-level data elements
proposed to be required to be reported to an RNSA, the proposed rule
did not require that securities lenders or their agents report
information on how they used collateral. Some commenters stated that
because of the potential threats to financial stability arising from
collateral re-use, the Commission should consider requiring that
securities lenders and their agents report information on how they
use collateral. See, e.g., Better Markets Letter, at 7-8. (commenter
stating support for requiring disclosure regarding the type of
collateral); See Sharegain Letter, at 3 (stating that ``[c]ollateral
information is essential to understanding fees--e.g., a loan
collateralized with equities would typically command a higher fee
than a loan collateralized with US treasuries''); see also IHS
Markit Letter, at 6-7 (recommending that proposed data elements
include reporting of a ``trade reference'' and ``lending agent trade
indicator'').
    \364\ See proposed Rule 10c-1(f).
    \365\ See proposed Rule 10c-1(b). See also Proposing Release, 86
FR 69813. This is done in order to allow an RNSA the necessary
flexibility to propose and implement rules regarding the format and
manner with respect to the collection of information. One commenter
stated that the proposed rule does not ``provide any details as to
the format of such data, whether it would be presented loan-by-loan,
the manner in which rates would be presented, whether the loan had
its inception as an open-ended loan or a term loan, whether the loan
was the subject of a portfolio-based auction, or whether it was part
of a conduit lending program.'' See Sharegain Letter, at 3.
Consistent with the Proposing Release, the Commission is not
specifying the details as to the format of the required data, the
manner in which rates would be presented, or other detailed
information requested, to give an RNSA the discretion to structure
its systems and processes as it sees fit and propose rules
accordingly, provided they are consistent with the final rule as
adopted as well as other requirements of the Exchange Act applicable
to an RNSA. See, e.g., Proposing Release, 86 FR 69816 n.104.
---------------------------------------------------------------------------

1. Loan Data Elements--Rule 10c-1a(c)
Proposed Rule
    To facilitate transparency in the securities lending market, the
proposed rule required certain loan transaction data elements to be
provided to an RNSA, on a transaction-by-transaction basis, within 15
minutes of the loan being effected, followed by an RNSA assigning each
loan a unique transaction identifier, and then making such information
publicly available as soon as practicable. The proposed rule included
twelve transaction data elements required to be provided to an
RNSA.\366\
---------------------------------------------------------------------------

    \366\ See Proposing Release, 86 FR 69813-14, 69851-52
(describing each of the proposed transaction data elements).
---------------------------------------------------------------------------

    In proposing the list of loan data elements required to be provided
to an RNSA, the Commission explained that the data elements in
paragraphs (b)(1) through (b)(5) of the proposed rule, which include
the legal name and legal entity identifier (``LEI'') of the issuer;
ticker symbol, International Securities Identification Number
(``ISIN''), CUSIP, or Financial Instrument Global Identifier (``FIGI'')
or other security identifier; date and time loan was effected; and
platform or venue loan was effected, identify each loan of
securities.\367\ In particular, the Commission explained, they contain
material terms that are not negotiated between the parties but are
elements that would provide important information to allow market
participants and regulators to track, understand, and perform analyses
on the negotiated terms contained in paragraphs (b)(6) through (b)(12)
of the proposed rule, which include the amount of security loaned;
securities lending fee or rate (or any other fee or charges); type of
collateral used; rebate rate (or any other fee or charges); percentage
of collateral to value of loaned securities; termination date of loan;
and, whether the borrower is a broker/dealer/customer/clearing agency/
bank/custodian/other person.\368\ The Commission also explained that
the proposed data elements in paragraphs (b)(1) through (b)(5) of the
proposed rule would provide an RNSA with enough information to create a
unique transaction identifier as required by the proposed rule.\369\
---------------------------------------------------------------------------

    \367\ See Proposing Release, 86 FR 69813.
    \368\ See Proposing Release, 86 FR 69814.
    \369\ See Proposing Release, 86 FR 69813. As stated by the
Commission in the Proposing Release, ``[p]aragraphs (1) and (2) of
proposed Rule 10c-1 identify the particular security being lent.
Paragraph (1) is designed to provide information on the issuer, and
paragraph (2) is designed to provide information on the particular
security. These paragraphs are designed to be flexible and
comprehensive so that every security that can be loaned is able to
be identified. In particular, with respect to paragraph (b)(1), the
Commission preliminarily believes that an issuer that lacks an LEI
would have a legal name. With respect to paragraph (b)(2), the
Commission preliminarily believes that securities usually would have
at least one of the items listed assigned to it. If not, the RNSA
could require an ``other identifier'' for further flexibility under
paragraph (2).'' Id.
---------------------------------------------------------------------------

    In proposing the negotiated data elements in paragraphs (b)(6)
\370\ through (b)(12) of the proposed rule, the Commission explained
that, because the data elements reflect material terms that are
negotiated when securities loans are arranged, increasing the
transparency of information will provide market participants with
meaningful data that could be used when structuring, pricing, or
evaluating loans of securities.\371\ The Commission also explained that
increasing transparency would allow market participants to analyze
signals obtained from the securities lending market when considering
investment or trading decisions for a security; and, would also permit
an RNSA to perform in-depth monitoring and surveillance of securities
lending transactions to

identify trends and any anomalous market patterns.\372\
---------------------------------------------------------------------------

    \370\ See Proposing Release, 86 FR 69814. In proposing the data
element in paragraph (b)(6) ``the amount of the security loaned''--
the Commission did not specify the parameters of ``the amount of the
security'' in order to allow an RNSA flexibility to propose rules
that identify, for different types of securities, what information
constitutes the ``amount of the security.''
    \371\ See Proposing Release, 86 FR 69814.
    \372\ See Proposing Release, 86 FR 69814. Additionally, the
Commission explained that the data element in proposed paragraph
(b)(11), regarding termination date, is intended to provide market
participants with an understanding of the potential future demand
and supply of securities; whereas proposed paragraph (b)(12), which
requires the borrower type for each transaction, is intended to
provide context for evaluating, and also enhance the transparency
provided by, the other data elements.
---------------------------------------------------------------------------

Final Rule
    The Commission sought comment with respect to each of the proposed
transaction data elements.\373\ In response, commenters were generally
supportive of the Commission's stated goals of increasing transparency
and price discovery in the securities lending market by increasing the
amount and availability of data in the market.\374\ For example, one
commenter stated in support of the proposed rule that, ``certain data
elements [should be made] publicly available, thereby increasing
transparency of the securities lending market and reducing competitive
advantages that may exist in the marketplace.'' \375\ Another commenter
also stated in support that the proposed public dissemination of
securities lending information will, among other things, improve price
discovery in the securities lending market, reduce information
asymmetries, close data gaps, and increase market efficiency.\376\
Another commenter stated that, ``Proposed Rule 10c-1 represents a
properly-tailored way to bring more transparency to this dark area of
the market.'' \377\ According to this commenter, ``[t]he Proposal would
establish a system for the reporting and dissemination of the material
terms of securities lending transactions without attribution, providing
issuers, investors, and regulators the necessary data . . . while
protecting the identity and intellectual property of any individual
market participant.'' \378\ Another commenter expressed support for the
proposed rule's inclusion of standards as part of the proposed data
elements to be reported, as well as the Commission's efforts to include
the LEI in the data elements for the identification of issuers and
parties to a lending transaction.\379\ Another commenter supported the
proposal allowing a choice in use of identifiers, such as the [FIGI],
as a possible required data element to be collected and disseminated by
an RNSA.'' \380\ Another commenter, in response to the Commission's
specific request for comment, stated that retail investors/borrowers
without LEIs should not be required to obtain a LEI as ``[r]egulators
can easily identify who we are by going to our brokers.'' \381\ Another
commenter suggested that the Commission should modify the proposal to
require ``lending agent'' be a reported field (instead of requiring the
lender's LEI to be disclosed) ``to avoid the potentially confusing
appearance of tens or even hundreds of individual loans that are, in
reality, part of the same overall loan transaction negotiated between a
borrower and a lending agent or third-party intermediary on behalf of
the underlying lender(s) for an aggregate notional amount.'' \382\
---------------------------------------------------------------------------

    \373\ The language ``transaction data elements'' in proposed
Rule 10c-1(b) has been revised to ``covered securities loan data
elements'' in final Rule 10c-1a(c) to be consistent with the use of
the newly defined term ``covered securities loan,'' to which the
elements refer, in the final rule.
    \374\ See, e.g., SBAI Letter, at 1 (agreeing with the
Commission's assessment of the important role of the securities
lending market, as well as supporting the Commission's objective to
increase transparency in this area).
    \375\ Nasdaq Letter, at 3.
    \376\ See FINRA Letter, at 1 (stating that the proposed rule
will provide the Commission and other regulators with data that
would be used for important regulatory, i.e., monitoring and
surveillance, functions); see also AFREF Letter 1, at 1, 3 (stating
``[t]here is an urgent need to require securities lenders to provide
greater details of their loans to an RNSA as outlined by the
proposed changes to Rule 10c-1 . . . market participants and
regulators alike will greatly benefit from the greater transparency
that comes from reporting every securities lending transaction as a
result of the proposed changes to Rule 10c-1.'').
    \377\ Letter from Hope M. Jarkowski, General Counsel, NYSE
Group, Inc. (Jan. 6, 2022) (``NYSE Letter 1''), at 2.
    \378\ NYSE Letter 1, at 1-2.
    \379\ See Letter from Stephen Wolf, CEO, Global Legal Entity
Identifier Foundation, at 3 (stating that the Commission and an RNSA
may benefit from the data that accompanies an LEI, i.e., company
legal name can be retrieved automatically or verified from a LEI
record).
    \380\ See Bloomberg L.P. Letter, at 1; see also HMA Letter, at 9
(agreeing with using publicly available methods to identify
financial instruments beyond CUSIPs). Consistent with the proposed
rule, the data elements required in paragraphs (b)(1) and (b)(2) of
the proposed rule are designed to be flexible as well as
comprehensive so that every loaned security is able to be
identified. See Proposing Release, 86 FR 69813. In the Proposing
Release, the Commission stated with respect to paragraph (b)(1),
that it ``preliminarily believes that an issuer that lacks an LEI
would have a legal name. With respect to paragraph (b)(2), the
Commission preliminarily believes that securities usually would have
at least one of the items listed assigned to it. If not, the RNSA
could require an ``other identifier'' for further flexibility under
paragraph (2).'' See Proposing Release, 86 FR 69813. Thus,
consistent with the Proposing Release, the Commission is not
determining whether and how all of the items in paragraph (c)(2) in
the final rule must be reported, to give an RNSA the discretion to
structure its systems and processes as it sees fit and propose rules
accordingly, provided they are consistent with the final rule as
adopted as well as other requirements of the Exchange Act applicable
to an RNSA. See id.
    \381\ See James J. Angel Letter, at 7 (expressing strong support
for the proposed rule but encouraged the Commission not to
micromanage the contractual terms between the reporting agents and
an RNSA). As this commenter explained, ``let FINRA work out the
details, as they have the experience, resources, and capability to
do a good job and the flexibility to update terms based on
experience.'' Id. at 7. In response, the final rule, as modified to
streamline and clarify rule text, and the modifications to update or
modernize the reporting requirements as needed are responsive to the
commenter.
    \382\ See, e.g., BlackRock Letter, at 3-4; see also FIF Letter,
at 9 (stating that reporting an LEI is duplicative and likely not
useful).
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    With regard to the proposed ``rebate rate or any other fee or
charges'' data element for cash collateralized loans,\383\ several
commenters pointed out that the relevant data point is actually the
lending spread to the reference rate (most commonly the Overnight Bank
Funding Rate or ``OBFR'') as the rebate rate will change daily based on
the current level of the reference rate, even as the negotiated lending
spread remains fixed.\384\ Thus, commenters requested that the
Commission clarify (where applicable) that pricing data may be reported
as a spread to a benchmark rate and, as discussed below in Part F.2,
that such pricing data element does not need to be updated for changes
in the value of the benchmark rate.\385\
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    \383\ See proposed Rule 10c-1(b)(9).
    \384\ See ICI Letter 1, at 5 n.19 (providing this as another
example of how the SEC's understanding of the securities lending
market structure appears to be inaccurate); see also BlackRock
Letter, at 2 (recommending that, to improve the transaction level
data collected, the transaction record for cash collateralized loans
should include the name of the reference rate used and the spread to
that reference rate instead of reporting the rebate rate). According
to this commenter, while there is a market convention of using the
OBFR as the reference rate, this is a negotiable term between the
parties to the lending transaction. See id. Moreover, according to
this commenter, the price negotiation centers on the spread to that
reference rate, not the rebate, and the rebate will fluctuate daily
as the reference rate value changes. See id. See also MFA Letter 3,
at 5 (recommending that the SEC pare back several of the granular
reporting elements that would be difficult to apply and/or
misleading, such as pricing, stating that ``the Proposed Securities
Lending Rule's requirements, for example, requires the rebate rate
to be reported in the pricing field, even though the rebate rate
will fluctuate potentially daily, as the reference rate--typically
the OBFR--changes, and as such would be subject to frequent
amendment that could be confusing to market participants'').
    \385\ See, e.g., BlackRock Letter, at 2; RMA Letter, at 4; see
also FIF Letter, at 9 (stating that ``[f]or securities loans that
are priced based on a spread to a benchmark, the Commission should
provide reporting parties the option to report pricing by reference
to the benchmark and the spread'').
---------------------------------------------------------------------------

    Another commenter expressed concern that fee and rebate data could
be misleading in the absence of additional contextual information,
stating that ``[f]ee/rebate data, without consideration of firm(s)
collateral requirements, counterparty/asset exposure(s), applied
lending restrictions or jurisdictional obligations, may create an
unrealistic and misleading portrayal

of prevailing rates.'' \386\ The final rule requires pricing
information in 17 CFR 240.10c-1a(c)(8) (``final Rule 10c-1a(c)(8)'')
and 17 CFR 240.10c-1a(c)(9) (``final Rule 10c-1a(c)(9)'') because
pricing is a material term of a covered securities loan. Further,
paragraph (g)(5) of the final rule requires that an RNSA will make a
distribution of loan rates for each reportable security publicly
available to help market participants compare the pricing of their
covered securities loan against the pricing of other covered securities
loans. Information about the distribution of loan rates recognizes that
the cost-to-borrow securities can be influenced by a number of factors
and can give market participants information to help compare the
pricing of their loan against other loans. Another commenter requested
clarification that only one identifier for a security is required to be
reported under the rule (i.e., ticker or ISIN or CUSIP or FIGI) rather
than all of them.\387\ The final rule permits a covered person to
determine which identifier to report, or if it prefers, it may also
report multiple identifiers, but one identifier is required to be
reported. Further, the final rule also permits the covered person to
report a different identifier than the ticker symbol, ISIN, CUSIP, or
FIGI. In addition, this commenter requested further clarification on
what type of system would represent a ``platform or venue'' for
purposes of proposed paragraph (b)(5).\388\ The final rule does not
specify what type of systems are a ``platform or venue'' for purposes
of the data elements required to be reported under 17 CFR 240.10c-
1a(c)(5) (``final Rule 10c-1a(c)(5)''). The terms are intended to
capture a wide variety of potential vehicles that covered persons might
use to transact securities loans. Further, an RNSA has discretion to
determine, pursuant to rules that would be subject to the section 19(b)
and Rule 19b-4 process, whether to categorize such vehicles (e.g., on-
line venue, exchange, OTC).
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    \386\ Letter from Adrian Dale, Head of Regulation, Digital &
Market Practice, ISLA (Jan 7, 2022) (``ISLA Letter''), at 2
(suggesting that such fee/rebate data could not be relied upon to
support price discovery in the same manner as other markets).
    \387\ See, e.g., FIF Letter, at 9. Consistent with the Proposing
Release, paragraph (b)(2) in the final rule states, ``securities
usually will have at least one of the items listed assigned to it.
If not, the RNSA will be able to require an `other identifier' for
further flexibility under paragraph (2).'' See Proposing Release, 86
FR 69813. As such, the Commission is not providing further details
concerning the required data elements in order to give an RNSA the
discretion to structure its systems and processes as it sees fit and
propose rules accordingly, provided they are consistent with the
rule as adopted as well as other requirements of the Exchange Act
applicable to an RNSA. See also supra notes 369 and 380. See Letter
from Robert Toomey, Head of Capital Markets, Managing Director &
Associate General Counsel, SIFMA (May 15, 2023) (``SIFMA Letter
3''), at 4-5 (stating that ``[m]any of the granular reporting
elements for securities loan transactions proposed by the SEC are
not applicable to short positions, or do not apply to short
positions in the same way as they apply to securities loans, and
would necessarily lead to incomplete, inaccurate, and misleading
data (e.g., percentage of collateral to value of loaned securities
required to secure the loan, type of collateral, and lending fee/
rebate fee)'').
    \388\ See FIF Letter, at 10 (stating that FIF members request
further clarification on what type of system would represent ``a
platform or venue'' for purposes of proposed paragraph (b)(5)'s data
element).
---------------------------------------------------------------------------

    Many commenters suggested that the proposed transaction-by-
transaction reporting requirement be replaced with an aggregated-only
requirement (i.e., with some of the commenters wanting both the
reporting and publishing of the data elements to be on an aggregated
basis only, while other commenters were supportive of reporting to an
RNSA on a transaction-by-transaction basis, but then any dissemination
to the public must be made by an RNSA on an aggregated-only
basis).\389\ For instance, one commenter recommended ``transaction-by-
transaction data be reported to an RNSA and made available to
regulators, but that the RNSA analyze and normalize the reported
transaction data to provide aggregated and, where appropriate, averaged
transaction terms that do not expose firm and customer investment
strategies, and that better reflect the transaction terms available to
lenders and borrowers in the securities lending market.'' \390\ Another
commenter stated that the Commission should narrow the scope of
transaction data information to be reported to an RNSA (and thereafter
made public by an RNSA) to only aggregated transaction data.\391\ Some
of the comments appeared to be focused on an RNSA's publication or
dissemination obligations when they stated that the final rule should
require an RNSA to publish aggregated pricing and volume data (rather
than transaction-by-transaction data).\392\ However, this was not
always clear as many of the comments received were less specific in
that their comments on aggregated disclosure were phrased in reference
to the proposed rule's reporting requirement \393\ or ``reveal short
selling trading strategies'' \394\ or disclosing all individual
customer short selling positions on a transaction-by-transaction
basis.\395\
---------------------------------------------------------------------------

    \389\ Although it seems as though the terms ``reporting'' and
``dissemination'' (or ``disclosure'') are used interchangeably by
some of the commenters, there appears to be agreement by commenters
that it is the public disclosure of the data elements by an RNSA
that should be required on an aggregated-only basis (rather than
requiring disclosure on a transaction-by-transaction basis). See,
e.g., ICI Letter 1, at 11 (although the commenter states, for
confidentiality reasons, that the Commission should only require
``reporting'' on an aggregated basis at the end of the day (and to
avoid front running risks and other predatory trading practices),
from the context of the letter, it appears to be the case that
concern is focused on information being disclosed to the public/
market); SBAI Letter, at 2; AIMA Letter 1, at 5; RMA Letter, at 18;
See also Letter from Matthew R. Cohen, CEO, Provable Markets LLC
(Jan. 7, 2022) (``PM Letter 2'') (while highly supportive of the
proposal's objective to increase transparency of information
available to brokers, dealers, and investors, commenter expressed
concerns that the Commission carefully consider and describe the
context of the information provided publicly to the market, and the
underlying benefits of each category published to the proposed
consolidated tape (similar reproduction of data) to the market).
However, one group of commenters disfavored any public dissemination
of information (i.e., before a study of the collected data are
conducted by the Commission and the Commission consults stakeholders
before making any determinations about the specifics of a public
dissemination regime) and stated the concern that the ``proposals
could compromise the [rule's] objectives by revealing sensitive and
potentially misleading information to the public . . . [and that the
Commission should] adopt an approach that requires reporting solely
for regulatory purposes.'' See Letter from Members of the U.S. House
of Representatives Frank D. Lucas, David Scott, Blaine Luetkemeyer,
Bill Foster, Glenn ``GT'' Thompson, Alma S. Adams, Ph.D., Bill
Huizengia, Vicente Gonzalez, Andy Barr, Josh Gottheimer, Ann Wagner,
Wiley Nickel, and Bryan Steil (July 12, 2023) (``Letter from
Representative Lucas, et al.''), at 1. See infra Part VIII regarding
the implementation period for the final rule.
    \390\ See SIFMA Letter 2, at 4.
    \391\ See SIFMA AMG Letter, at 6-7.
    \392\ See, e.g., RMA Letter, at 4; IIB Letter, at 10; EBF
Letter, at 2 (commenters use the terms ``public dissemination'' or
``publicly disseminating'' when referring to aggregated information
or transaction data).
    \393\ See generally Letter from Jennifer Han, Executive Vice
President, Chief Counsel & Head of Regulatory Affairs, Managed Funds
Association (Apr. 1, 2022) (``MFA Letter 2'').
    \394\ See SIFMA AMG Letter, at 7.
    \395\ See CCMR Letter, at 5.
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    The requirements in paragraph (b) of final Rule 10c-1a are limited
in scope to the reporting agent's obligation to provide certain
specified data elements to an RNSA on behalf of a covered person. As
such, the discussion in this part is limited to the reporting agent's
provision of the Rule 10c-1a information directly and solely to an
RNSA, which does not involve or require any public disclosure or public
dissemination of such information. By contrast, the dissemination or
disclosure of the required information is the obligation of an RNSA,
and paragraph (g) of the final rule, and Part VII.J below, discuss an
RNSA's responsibilities with respect to disseminating certain Rule 10c-
1a information to the public.
    After considering the comments received recommending that the final
rule require only aggregated pricing and volume data to be publicly
disclosed (discussed below in Part VII.J), the

Commission has determined not to modify the proposed transaction-by-
transaction reporting requirement with respect to the provision of Rule
10c-1a information to an RNSA. Such a modification to paragraph (c) of
the final rule is unnecessary because the requirement involves
reporting of the information directly and only to an RNSA (and not to
the public). As such, the reporting requirement does not present the
concerns raised by commenters that would warrant requiring the
reporting of the data elements on an aggregated-only basis, as was
suggested by some commenters.\396\ Likewise, another commenter
suggested that, to decrease the likelihood that published data will be
potentially misleading or confusing or that it could reveal short
trading strategies that could prompt short sellers to exit the market,
the Commission should adjust the information that is made publicly
available by an RNSA to be only aggregated securities lending data,
including, among other things, a volume-weighted average borrowing fee
aggregated across all firms, for each security loaned.\397\ Similarly,
for the same aforementioned reasons, it is unlikely that providing data
information directly and solely to an RNSA will reveal such short
trading strategies or mislead or confuse the public to warrant such a
modification to the final rule. Instead, because paragraph (c) of the
final rule only requires the reporting of information to an RNSA
(rather than to disclose the information to the public), the risk of
revealing short trading strategies or confusing the public is not
applicable. Moreover, an RNSA's responsibilities with respect to the
subsequent publication of certain Rule 10c-1a information are subject
to the requirements and limitations set forth in paragraph (g) of the
final rule,\398\ which are discussed below, in Part VII.J.\399\ Thus,
the Commission is adopting the proposed requirement to report Rule 10c-
1a information, on a transaction-by-transaction basis, directly and
solely to an RNSA.\400\
---------------------------------------------------------------------------

    \396\ See infra Part VII.J, for discussion regarding the
responsibilities of an RNSA with respect to the dissemination of
certain Rule 10c-1a information (particularly with respect to the
amount, such as size, volume, or both of the reportable securities
loaned) that an RNSA receives.
    \397\ See SIFMA Letter 1, at 18-19. The commenter further stated
that it does not object to the proposal to report by the end of the
day information on ``securities on loan.'' See id.
    \398\ See final Rule 10c-1a(g).
    \399\ Some commenters stated that requiring public disclosure of
securities lending activity on a transaction-by-transaction basis,
especially within the proposed 15-minute timeframe, would reduce
overall short selling activity by inhibiting and increasing the cost
of building short positions and, thus, negatively affect market
liquidity and pricing efficiency (i.e., by making it more costly to
build short positions and thus inhibit market participants from
doing so). See, e.g., SIFMA AMG Letter, at 5-7; see also CCMR
Letter, at 5 (stating the disclosure of such activity would increase
the costs associated with establishing a short position through
information leakage and slippage; or lead to copycat short selling
activity, which could also increase the cost to borrow the security
due to increased demand or could facilitate ``short squeezes'').
However, as discussed above, modifying the required timeframe for
reporting the data elements to an RNSA, and an RNSA's dissemination
of such information to the public, as discussed below, in Part
VII.J, should help to address the disclosure-related concerns raised
by the commenters.
    \400\ See also infra Part VII.J regarding the responsibilities
of an RNSA, particularly with respect to the dissemination of Rule
10c-1a information (including with respect to the amount, such as
size, volume, or both, of the reportable security loaned) an RNSA
receives, keeping together in the release the various RNSA-related
provisions.
---------------------------------------------------------------------------

    In addition, the Commission is adopting, essentially unchanged, the
twelve data elements originally set forth in paragraphs (b)(1) through
(b)(12) in the proposed rule, except the Commission is making the
following non-substantive changes to the language of some of the
proposed data elements.\401\ Specifically, the Commission is modifying
the language of the ``the amount of the security loaned'' data element
in paragraph (b)(6) of the proposed rule (i.e., by adding the language
``such as the size, volume, or both)'' so that it instead reads, as
adopted, ``the amount, such as size, volume, or both, of the reportable
securities loaned.'' \402\ This change will help ensure the compliance
and accuracy of the Rule 10c-1a information submissions to an RNSA, by
specifying in the final rule that the term ``amount'' means ``size,
volume, or both.'' \403\
---------------------------------------------------------------------------

    \401\ The proposed time periods for reporting the specified
information to an RNSA are discussed below, in Part VII.G.
    \402\ With respect to the covered securities loan data element
in paragraph (c)(6) of the final rule, the amount of the security
loaned or borrowed, other than to add the clarifying language ``such
as size, volume, or both'' the Commission is not ``specifying the
parameters of `the amount of the security' to allow an RNSA
flexibility to propose rules that identify for different types of
securities what information constitutes the `amount of the
security.' For example, an RNSA could propose rules that require the
number of shares be provided for equity securities and the par value
of debt securities to accommodate differences in the markets for
these securities.'' See Proposing Release, 86 FR 69814.
    \403\ See final Rule 10c-1a(c)(6) (requiring reporting of ``the
amount, such as size, volume, or both, of the reportable security
loaned.''). Modifying this loan data element to clarify that the
``amount'' means ``size, volume, or both'' helps to address the
concern raised by a commenter that had suggested a ``unit'' field to
accompany the proposed ``amount'' data element in paragraph (b)(6)
of the proposed rule so as to allow the ``amount'' to be defined
``unambiguously as a quantity, a notional value or similar as
appropriate.'' See Letter from Jim Kaye, Americas Regional Director,
FIX Trading Community (Jan. 4, 2022) (``FIX Trading Letter''), at 2
(requesting further clarification on and the use of common standards
for details of the data to be published, similar to the technical
standards used by ESMA and SFTR, and a ``security id'' filed to
accompany ``security identifier'' as certain crypto assets do not
have ISINs so the list of eligible securities identifier types needs
to allow for this, i.e., support ISO standards for digital token
identifiers).
---------------------------------------------------------------------------

    The Commission also is modifying proposed paragraph (b)(6) by
changing ``security'' to ``securities'' (thus, making it plural,
consistent with the term ``securities'' in paragraph (b)(10)); and,
also modifying both proposed paragraphs (b)(6) and (b)(10) by adding
the term ``reportable'' to each, so that they are both consistent with
the final rule's newly defined term, ``reportable securities.'' The
Commission also is modifying language in proposed paragraph (b)(1) by
changing the term ``active LEI'' to ``non-lapsed LEI'' for accuracy
(i.e., by focusing more precisely on the status of the application for
the LEI-indicator, rather than on the entity itself).\404\ The
Commission has modified proposed paragraph (b)(2) by providing the full
names of specified security identifiers and retaining the corresponding
abbreviations within a parenthetical with quotes to 17 CFR 240.10c-
1a(c)(2) (``final Rule 10c-1a(c)(2)'').
---------------------------------------------------------------------------

    \404\ See 17 CFR 240.10c-1a(c)(1) (``final Rule 10c-1a(c)(1)'').
---------------------------------------------------------------------------

    The required pricing data, ``[f]or a loan collateralized by cash,
the rebate rate or any other fee or charges,'' in paragraph (c)(8) of
the final rule generally should include when the pricing data element
is negotiated or agreed-to as a spread to an identified benchmark or
reference rate.\405\ The Commission recognizes that the pricing data
element is a material term of the loan that is often negotiated or
agreed to between the parties. Consistent with paragraph (b)(9) of the