Writing on a New SLATE – DWT's FINRA Expertise

Key Takeaways

• The SEC's Rule 10c-1a now mandates the reporting of securities loans, marking a significant regulatory shift.
• Potential challenges in implementing SLATE, including the need for possible adjustments to data dissemination requirements, remain.
• Davis Wright Tremaine has established a SLATE Task Force to assist firms in navigating these new requirements, leveraging our deep financial services regulatory expertise.

As discussed in our previous post, the Securities and Exchange Commission ("SEC") has adopted Rule 10c-1a under the Securities Exchange Act of 1934 ("Exchange Act") requiring for the first time the reporting of securities loans to and providing for the public dissemination of loan information by the Financial Industry Regulatory Authority ("FINRA").[1] FINRA exercised this authority by proposing rules to create and implement the Securities Lending and Transparency Engine ("SLATE").[2] On January 2, 2025, the SEC approved FINRA's new Rule 6500 Series to implement SLATE as amended by FINRA after considering a variety of commentator objections and suggestions ("Approval Order").[3]

A few weeks later, on January 24, 2025, FINRA's president and CEO, Robert Cook, posted a blog on FINRA's Media Center stating that FINRA staff will be seeking an extension of the January 2, 2026, implementation deadline for SLATE (the "Blog Post"). The Blog Post also noted that FINRA "[w]ill be asking the SEC to consider revisiting certain operational requirements under Rule 10c-1a in light of what has been learned since the Rule's adoption." Cook specifically mentioned that "testing and launching a significant new reporting system that is heavily technology dependent at the turn of the calendar year could present unnecessary risks and challenges for the orderly rollout of the system" and the need to "consider whether adjustments to the data dissemination requirements are appropriate to avoid unintended consequences arising from such dissemination."

As a result, the reporting and public dissemination of securities loans continues to be an area where significant developments should be expected over the next year and beyond.

FINRA has taken two significant additional steps in implementing SLATE:

1. Published SLATE Participant Reporting Specifications ("Specs");[4] and
2. Filed a rule change with the SEC to set forth in FINRA Rule 7720 securities loan reporting fees and securities loan data products and associated fees.[5]

DWT's SLATE Task Force

These new requirements will present a variety of implementation and interpretive challenges for the parties involved in making and reporting securities loans. Davis Wright Tremaine has established a SLATE Task Force to assist affected parties in understanding the requirements of the Rule 6500 Series and Rule 7720 and in implementing the Specifications. Please contact the authors at DWT—Larry Bergmann, Russell Fecteau, Nellie Dunderdale, and Ella Beres—with questions or for more information about FINRA's SLATE Program.

[1] Release 34-98737 (Oct. 13, 2023), 88 FR 75644, 2023-23052 (adoption of Rule 10c-1a). The SEC noted that the rule has been challenged in the U.S. Court of Appeals for the 5th Circuit, but that action "does not challenge the compliance date(s) set forth [in Rule 10c-1a] or the need for affected parties to comply with Rule 10c-1a." Approval Order, 90 FR at 1585. Oral argument was held on October 7, 2024.

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