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Closing day one of the Risk Management Association (RMA) conference, the final set of panellists discussed the proposals submitted to the Securities and Exchange Commission (SEC) by the RMA Securities Lending Council.
The pending proposals included the increased disclosures around proxy voting (Form NP-X), enhanced transparency on daily loan activity (10c-1) and condensed settlement timing (T+1).
A “somewhat novel” set of priority areas has emerged from the SEC — including environmental and social reforms, fixed income and market structure, and market data reporting and transparency.
There will be relatively less focus on institutional market practices outside of USTs. However, there will be a big emphasis on “levelling the playing field” and controlling larger trades. Areas of impact for institutional securities markets include T+1, data reporting in terms of securities lending reporting, and environmental, social and governance (ESG) rules, to name a few.
In terms of the proposed settlement date for transactions, one panellist questioned the quality that can come from the data produced in the timeframe of T+15 minutes. Although it is possible for firms to produce a file every 15 minutes, the panellist warned that the data in that file may not be a true reflection of what is seen in the marketplace.
Under the 10C-1 proposal, which was proposed on 18 November 2021, a reporting party would be required to report transaction information to a registered national securities association (RNSA) within 15 minutes after each loan is effected.
According to the panel, information other than party identifiers and whether the loan is to close out a fail would be publicly disseminated as soon as practicable without charge or use restrictions. Loans that are outstanding and securities available to loan would be reported end-of-day.
Another issue raised by the panellist questioned who T+15 minutes will affect, for instance, will it only cover firms who are governed by the SEC or the marketplace as a whole. He continues to say that, conceptually, if a firm had a subset of data that is being reported every 15 minutes, that is not a perfect set of information, publishing that could potentially have knock on impacts to the marketplace.
