The Securities Industry and Financial Markets Association (SIFMA), along with SIFMA Asset Management Group (SIFMA AMG), sent comment letters to the Securities and Exchange Commission (SEC) on its proposed rule on data reporting.
The proposed rule would introduce a regime requiring the reporting of data, terms, and other market information regarding securities lending transactions to a registered national securities association (RNSA) and the subsequent public reporting of select data.
SIFMA is concerned that the proposed rule, as drafted, could result in “the public dissemination of incomplete, inaccurate, and misleading information that could have a severe adverse impact on the securities lending market as well as the overall securities markets. The proposed rule would also impose significant costs on SIFMA member firms, which are not commensurate with the benefits sought to be achieved. However, given the very short comment period, SIFMA and its members do not have sufficient time to fully analyze and calculate the true anticipated cost of implementing the proposed reporting regime.”
SIFMA suggested alternatives that it believes would meet the SEC’s policy goals while avoiding adverse consequences. Among them, SIFMA suggested that the rule define what it means to “loan a security” and expressly exclude transactions such as short sales that do not constitute securities lending. This would ensure consistent reporting and avoid confusion and misinterpretation of data by the public.
In its letter, SIFMA AMG said the 30-day comment period in the proposed rule is inadequate given the magnitude of the proposed new regime and the nuanced aspects of the securities lending market. It also said the proposed rule would result in unintended negative consequences and could hurt the securities lending market as well as the overall securities markets.
“SIFMA AMG supports the SEC’s objectives, pursuant to Section 984 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, of increasing the transparency of information available to all market participants with respect to the securities lending market, with the goal of providing greater access to pricing and other material information in a timely manner and facilitating regulatory monitoring and surveillance,” SIFMA AMG officials wrote.