ABA Urges Tailored Securities Lending Reporting to Minimize Burdens, Market Disruptions 

ABA told the Securities and Exchange Commission on Friday that proposed new disclosure rules for the reporting of securities loans would impose a “considerable expense” to institutional investors and their agent lenders engaging in securities lending activities and urged reasonable amendments to reduce reporting burdens.

The SEC’s proposed rule would require persons “that loan a security on behalf of itself or another person” to disclose the terms of such transactions to a registered national securities association, namely the Financial Industry Regulatory Authority. The disclosed information would include information about the security, terms of the transaction and must be provided to FINRA within 15 minutes of the transaction.

The association said that imposing significant costs on the lending agents and their beneficial owner clients “may dissuade many from making their securities available to lend, given that securities lending is a low-margin business.” The new reporting rules should also be implemented incrementally, ABA said, to allow the market to absorb the costs of the regulations and build in time for ongoing assessment of effectiveness and refinement or reporting.