Monday, April 18, 2022

SEC Gets an “Earful” on Securities Lending and Short-selling Disclosure Proposals

And Another Thing - Longer Comment Periods, Please

Author: David Schwartz J.D. CPA

The Securities and Exchange Commission's controversial securities lending disclosure proposal (Proposal) sought public input on 97 questions and received a substantial body of feedback during the initial 30-day comment period. Drawing sharp rebukes, most responses from trade associations for lenders and borrowers focused on the ambiguous scope of rule 10c-1, the feasibility of the proposed 15-minute reporting regime, lopsided cost and technology burdens, and the risks of reverse engineering posed by the public disclosure provisions. Acquiescing after a month of consideration to the desires of a host of commenters for more time to respond, the Commission extended the Proposal's comment period from January 7, 2022, to April 1, 2022. The securities lending industry took advantage of the extra time to amplify prior criticisms and raise new issues with the Proposal, giving the SEC yet another earful.

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Thursday, March 3, 2022

Disclosure and Beyond: Restructuring the U.S. Equity Markets

BRIEFING GUIDE to the SEC's Aggressive Agenda to Head off the Next "Big Squeeze"

Author: David Schwartz J.D. CPA

On Friday, February 25, 2022, the Securities and Exchange Commission (SEC) proposed its latest round of GameStop rule proposals. In addition to enhanced public disclosures of short sales by institutional investors, the Commission announced a 30-day extension of the comment period on its sweeping securities lending disclosure proposal, Rule 10c-1, and technical amendments to the "consolidated audit tape" regulations. These separate, but related, disclosure proposals may well be the start of a much broader and far-ranging regulatory response to the kind of market disruptions epitomized by the Gamestop event.  

 

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Thursday, December 30, 2021

Digitized Finance Testing Approved by European Union

Buy-in Agreement clears the way for DLT Settlement Pilot

Author: David Schwartz J.D. CPA

The European Commission has reached agreement with legislators and financial trade groups on a digitized infrastructure to reshape the EU and, by extension, the global securities markets. The resolution affects all transactions involving EU securities, including securities loans, by (1) green-lighting the Distributed Ledger Pilot Regime, an effort to foster fintech innovation in the EU, and (2) delaying mandatory buy-ins, a highly contentious aspect of the ongoing sweeping reforms to the EU's securities settlement system. 

 

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Monday, December 6, 2021

Selling Transparency: A Bean Counter's Blog

NEW DATA MODEL FOR SECURITIES FINANCE

Author: Ed Blount

A new disclosure data model has just been proposed by the SEC for U.S. securities lenders. Adoption of the model, called 10c-1 after the revised regulation, would be “one of the most drastic adjustments in the history of the securities lending industry,” writes Sidley Austin, a leading Wall Street law firm and advisor to broker-dealers. Previously, we have explained the proposal and intended benefits. Now we begin to analyze the proposed 10c-1 disclosure system’s value proposition. Will disclosure help more than it will cost to create and manage the network that supports the new disclosure system?

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Sunday, November 21, 2021

SEC Proposes Sweeping Securities Lending Disclosure Rules

Bringing Securities Lending Out of the Dark.

Author: David Schwartz J.D. CPA

On November 18, 2021, the Securities and Exchange Commission proposed broad disclosure rules intended to "provide transparency in the securities lending market." As directed by the Dodd-Frank Act, the Commission proposed these rules to (1) supplement publicly available information, (2) close data gaps in the securities lending market, (3) minimize information asymmetries between market participants, and (5) provide market participants with access to pricing and other material information.

Further, the data elements proposed to be collected are intended to provide regulators with the information necessary to perform effective market surveillance. "This proposal would bring securities lending out of the dark," according to SEC Chair Gary Gensler. 

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