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[Federal Register Volume 89, Number 229 (Wednesday, November 27, 2024)]
[Notices]
[Pages 93750-93757]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27742]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101697; File No. SR-FINRA-2024-020]

Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Adopt Fees in FINRA Rule 7720 (Securities 
Lending and Transparency Engine (SLATETM))

November 21, 2024.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 20, 2024, the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by FINRA. FINRA has 
designated the proposed rule change as ``establishing or changing a 
due, fee or other charge'' under Section 19(b)(3)(A)(ii) of the Act \3\ 
and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal 
effective upon receipt of this filing by the Commission. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to adopt new FINRA Rule 7720 (Securities Lending 
and Transparency Engine (SLATETM)) to establish securities 
loan reporting fees and securities loan data products with associated 
fees in connection with FINRA's separately proposed Rule 6500 Series 
(Securities Lending and Transparency Engine (SLATE)) establishing 
securities loan reporting and data dissemination requirements.\5\
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    \5\ See infra note 6.
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    The text of the proposed rule change is available on FINRA's 
website at http://www.finra.org, at the principal office of FINRA and 
at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FINRA included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. FINRA has prepared summaries, set forth in sections A, 
B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
(i) Background
    On October 13, 2023, the Commission adopted new SEA Rule 10c-1a \6\ 
to require any ``covered person'' \7\ who agrees to a ``covered 
securities loan'' \8\ to

[[Page 93751]]

provide specified information to a registered national securities 
association (``RNSA'').\9\ The RNSA is then required to make publicly 
available information regarding reported securities loans, as described 
in SEA Rule 10c-1a.\10\ In its Adopting Release, the Commission stated 
its belief that SEA Rule 10c-1a would increase transparency in the 
securities lending market, resulting in a reduction in the information 
disadvantage faced by end borrowers and beneficial owners, improve 
price discovery, increase competition among providers of securities 
lending analytics services, reduce costs associated with tracking 
market conditions for broker-dealers and lending programs, and improve 
decision-making by investors, beneficial owners, and other market 
participants.\11\
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    \6\ See 17 CFR 240.10c-1a (``SEA Rule 10c-1a''); Securities 
Exchange Act Release No. 98737 (October 13, 2023), 88 FR 75644 
(November 3, 2023) (Reporting of Securities Loans) (``Adopting 
Release'').
    \7\ SEA Rule 10c-1a(j)(1) defines a ``covered person'' as (i) 
any person that agrees to a covered securities loan on behalf of a 
lender (``intermediary'') other than a clearing agency when 
providing only the functions of a central counterparty pursuant to 
Rule 17Ad-22(a)(2) of the Exchange Act or a central securities 
depository pursuant to Rule 17Ad-22(a)(3) of the Exchange Act; or 
(ii) any person that agrees to a covered securities loan as a lender 
when an intermediary is not used unless paragraph (j)(1)(iii) of 
this section applies; or (iii) a broker or dealer when borrowing 
fully paid or excess margin securities pursuant to Rule 15c3-3(b)(3) 
of the Exchange Act.
    \8\ SEA Rule 10c-1a(j)(2) defines a ``covered securities loan'' 
as a transaction in which any person on behalf of itself or one or 
more other persons, lends a reportable security to another person, 
with exclusions for a position at a clearing agency that results 
from central counterparty services pursuant to Rule 17Ad-22(a)(2) of 
the Exchange Act or central securities depository services pursuant 
to Rule 17Ad-22(a)(3) of the Exchange Act, and the use of margin 
securities, as defined in Rule 15c3-3(a)(4) of the Exchange Act, by 
a broker or dealer. ``Reportable security'' is defined in SEA Rule 
10c-1a(j)(3) as any security or class of an issuer's securities for 
which information is reported or required to be reported to the 
consolidated audit trail as required by Sec.  242.613 of the 
Exchange Act and the CAT NMS Plan (``CAT''), the Financial Industry 
Regulatory Authority's Trade Reporting and Compliance Engine 
(``TRACE''), or the Municipal Securities Rulemaking Board's Real-
Time Transaction Reporting System (``RTRS''), or any reporting 
system that replaces one of these systems.
    \9\ SEA Rule 10c-1a(j)(5) defines an ``RNSA'' as an association 
of brokers and dealers that is registered as a national securities 
association pursuant to 15 U.S.C. 78o-3 of the Exchange Act. FINRA 
currently is the only RNSA.
    \10\ See SEA Rule 10c-1a(g).
    \11\ See Adopting Release, 88 FR 75644, 75692.
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    SEA Rule 10c-1a(f) requires an RNSA that is collecting the 
information required to be reported under the rule to implement rules 
regarding the format and manner of its collection of information 
described in paragraphs 10c-1a(c) through 10c-1a(e) of SEA Rule 10c-1a 
and make publicly available such information in accordance with rules 
promulgated by the RNSA pursuant to Section 19(b) of the Exchange Act 
and Rule 19b-4 thereunder. In accordance with this requirement, on May 
1, 2024, FINRA filed with the Commission a proposed rule change to 
adopt the new FINRA Rule 6500 Series (Securities Lending and 
Transparency Engine (SLATE)) to establish reporting requirements for 
Covered Securities Loans \12\ and to provide for the public 
dissemination of loan information.\13\
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    \12\ A ``Covered Securities Loan'' means a ``covered securities 
loan'' as defined in SEA Rule 10c1-a(j)(2).
    \13\ See Securities Exchange Act Release No. 100046 (May 1, 
2024); 89 FR 38203 (May 7, 2024) (Notice of Filing of File No. SR-
FINRA-2024-007) (Proposed Rule Change to Adopt the FINRA Rule 6500 
Series (Securities Lending and Transparency Engine)) (``SLATE 
Proposal'').
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    In its Adopting Release, the Commission recognized that an RNSA 
would incur costs to develop and maintain systems to comply with the 
covered securities loan reporting and data dissemination requirements 
of SEA Rule 10c-1a \14\ and expressly permitted an RNSA to establish 
and collect reasonable fees pursuant to rules established under Section 
19(b) of the Exchange Act and Rule 19b-4 thereunder.\15\ The purpose of 
this proposed rule change is to establish a SLATE fee structure to 
allow FINRA to recover reasonably estimated incremental direct ongoing 
costs associated with complying with SEA Rule 10c-1a.\16\
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    \14\ See Adopting Release, 88 FR 75644, 75717.
    \15\ See Adopting Release, 88 FR 75644, 75648.
    \16\ FINRA does not have regulatory authority over Covered 
Persons or Reporting Agents that are non-FINRA members. As FINRA 
does today, FINRA would refer to the SEC potential violations of the 
federal securities laws and rules by non-members, including failures 
to comply with SEA Rule 10c-1a and FINRA rules adopted pursuant to 
SEA Rule 10c-1a (e.g., potential SLATE reporting violations or 
failures to pay when due any SLATE fees).
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    Among other things, the SLATE Proposal would establish the 
requirements for reporting Initial Covered Securities Loans \17\ and 
Loan Modifications \18\ to SLATE and would require that such reports be 
submitted to FINRA timely, accurately, and completely.\19\ In the SLATE 
Proposal, FINRA stated its intention to file separately a proposed rule 
change to establish covered securities loan reporting fees and to 
establish securities loan data products with associated fees.\20\ The 
SLATE Proposal also provided that FINRA would make specified securities 
loan information available on its website free of charge for personal, 
non-commercial purposes only.\21\ In the instant filing, FINRA proposes 
to establish such reporting fees and to establish SLATE data products 
with associated fees, as described below.
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    \17\ ``Initial Covered Securities Loan'' means a new Covered 
Securities Loan not previously reported to SLATE. See proposed Rule 
6510(d).
    \18\ ``Loan Modification'' means a change to any Data Element 
with respect to a Covered Securities Loan (irrespective of whether 
such Covered Securities Loan was previously reported to SLATE). See 
proposed Rule 6510(e).
    \19\ See proposed Rule 6530(c)(1); see also SLATE Proposal, 89 
FR 38203, 38210.
    \20\ See SLATE Proposal, 89 FR 38203, 38206.
    \21\ See SLATE Proposal, 89 FR 38203, 38212 n.80. The SLATE data 
that FINRA will make available (pursuant to FINRA Rule 6540.02) will 
be displayed (viewable) free of charge on the FINRA website for 
personal, non-commercial purposes and will not be available in 
downloadable form through this means. Persons interested in 
receiving from FINRA downloadable files of SLATE data must subscribe 
to the appropriate data product made available pursuant to proposed 
Rule 7720.
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(ii) Proposed Rule Change
    FINRA is proposing to establish new Rule 7720 to provide for 
reporting fees for: (1) SLATE system connectivity; (2) Initial Covered 
Securities Loan reporting; (3) Loan Modification reporting; (4) late 
reporting; and (5) reporting cancellations, corrections, and deletions. 
Rule 7720 also establishes data products with associated fees for SLATE 
Loan-Level Data and Daily Loan Statistics; \22\ and Historic SLATE 
Data.\23\
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    \22\ ``SLATE Loan-Level Data and Daily Loan Statistics'' means 
the data described in proposed Rule 6540(a) through (c).
    \23\ ``Historic SLATE Data'' means SLATE Loan-Level Data and 
Daily Loan Statistics from the beginning of SLATE data reporting 
through the end of the most recent calendar year.
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SLATE Reporting Fees
    Previously proposed new Rule 6530(a) would establish the 
requirements relating to the reporting of Initial Covered Securities 
Loans to SLATE. Proposed Rule 7720(b)(1) provides that, for each such 
Initial Covered Securities Loan report, a SLATE Participant will be 
subject to a reporting fee of $0.07 per submission. Previously proposed 
new Rule 6530(b) would establish the requirements relating to the 
reporting of Covered Securities Loan Modifications to SLATE. Proposed 
Rule 7720(b)(2) provides that, for each such Loan Modification report, 
a SLATE Participant will be subject to a reporting fee of $0.03 per 
submission.
    Proposed Rule 7720 also establishes fees for the reporting of 
cancellations, corrections, and deletions of previously submitted 
Covered Securities Loans and for the late submission of Initial Covered 
Securities Loan and Loan Modification reports, which is consistent with 
the requirement that Covered Persons report timely, accurately, and 
completely to SLATE,\24\ and facilitates the dissemination of accurate 
and complete information to regulators and the public.\25\ 
Specifically,

[[Page 93752]]

pursuant to proposed Rule 7720(b)(3), a SLATE Participant will be 
charged a cancel,\26\ correct,\27\ or delete \28\ fee of $0.10 per 
canceled, corrected, or deleted Covered Securities Loan report. In 
addition, proposed Rule 7720(b)(4) establishes a late fee of $0.20 per 
Initial Covered Securities Loan report or Loan Modification report that 
is not timely reported to SLATE as required pursuant to the Rule 6500 
Series.\29\
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    \24\ See proposed Rule 6530(c)(1). Proposed Rule 6530(c)(2) 
further provides that a member's pattern or practice of late 
reporting without exceptional circumstances may be considered 
conduct inconsistent with high standards of commercial honor and 
just and equitable principles of trade, in violation of FINRA Rule 
2010. See SLATE Proposal, 89 FR 38203, 38210.
    \25\ ``[SEA Rule 10c-1a] is designed to provide access to 
timely, comprehensive securities loan information to market 
participants, the public, and regulators, which will help provide 
borrowers and lenders with better tools to assess the terms of their 
securities loans and enhance the ability of regulators to oversee 
the securities lending market.'' Adopting Release, 88 FR 75644, 
75648.
    \26\ A ``cancellation'' is used to remove a single event from 
the SLATE system. See Draft SLATE Participant Reporting 
Specifications, available at https://www.finra.org/filing-reporting/slate.
    \27\ A ``correction'' is used to replace fields in a prior 
reported event. See Draft SLATE Participant Reporting 
Specifications, available at https://www.finra.org/filing-reporting/slate.
    \28\ A ``deletion'' is used to remove an entire loan and all 
corresponding loan events (i.e., modifications, corrections, etc.). 
See Draft SLATE Participant Reporting Specifications, available at 
https://www.finra.org/filing-reporting/slate.
    \29\ While FINRA will seek to address late or inaccurate SLATE 
reporting through its customary means, FINRA believes it is 
appropriate to establish fees to promote timely and accurate 
reporting. See also SLATE Proposal, 89 FR 38203, 38206 n.17.
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    Proposed Rule 7720 also sets forth the fees for connecting to 
SLATE. Specifically, proposed Rule 7720(a) provides that a SLATE 
Participant may choose to report Covered Securities Loans to FINRA 
pursuant to the Rule 6500 Series either via: (1) the SLATE web browser; 
or (2) a third-party reporting intermediary (and such third party must 
use the SLATE web browser). The fee for connecting to the SLATE web 
browser is $25 per month per user ID and will be assessed for 
connecting to SLATE through the browser, whether a Covered Person 
Reporting Agent, or other third party.\30\
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    \30\ The $25 per month fee for connecting to the SLATE web 
browser is assessed per user (not per entity). Therefore, a single 
SLATE Participant will be charged $25 per month times the number of 
users that it determines to authorize for connecting to SLATE 
through the browser for SLATE reporting. This connectivity fee is 
not applicable to, or assessed on, SLATE data product subscribers 
for the purposes of receiving SLATE data.
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SLATE Loan-Level Data and Daily Loan Statistics
    FINRA is proposing Rule 7720(c) to establish the SLATE Loan-Level 
Data and Daily Loan Statistics data product with associated fees. As 
defined in Rule 7720(e)(2), ``SLATE Loan-Level Data and Daily Loan 
Statistics'' means the data described in proposed Rule 6540 
(Dissemination of Loan Information) paragraph (a), which addresses 
next-day dissemination; \31\ paragraph (b), which addresses delayed 
dissemination; \32\ and paragraph (c), which addresses daily loan 
statistics (i.e., aggregate loan transaction activity \33\ and loan 
rate distribution data \34\). Proposed Rule 7720(c) sets forth the fees 
applicable to subscribers that are persons and organizations other than 
qualifying Tax-Exempt Organizations \35\ and subscribers that are 
qualifying Tax-Exempt Organizations. Recipients of the SLATE Loan-Level 
Data and Daily Loan Statistics product described herein will be 
required to execute appropriate agreements with FINRA to subscribe to 
SLATE Loan-Level Data and Daily Loan Statistics.
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    \31\ SLATE data that is subject to next day dissemination 
generally consists of the data set forth in Rule 6540(a): (1) the 
unique identifier assigned by FINRA to the loan; (2) the security 
identifier(s) specified in Rule 6530(a)(2)(A) or (B) that FINRA 
determines is appropriate to disseminate; (3)(a) for each Initial 
Covered Securities Loan, all other Data Elements reported to SLATE, 
except the amount of securities loaned and confidential data 
elements; (b) for each Loan Modification, the modified Data Elements 
reported to SLATE, except the amount of securities loaned and 
confidential data elements; or (c) for each Loan Modification to a 
Covered Securities Loan that was not previously required to be 
reported to SLATE, all other Data Elements reported to SLATE, except 
the amount of securities loaned and confidential data elements.
    \32\ SLATE data that is subject to delayed dissemination (20 
business days after the date on which the Initial Covered Securities 
Loan was effected or the loan was modified) generally consists of 
the data set forth in Rule 6540(b): (1) the unique identifier 
assigned by FINRA to the Covered Securities Loan; (2) the security 
identifier(s) specified in Rule 6530(a)(2)(A) or (B) that FINRA 
determines is appropriate to disseminate; and (3) the amount of 
securities loaned reported to SLATE.
    \33\ Aggregate loan transaction activity data generally consists 
of the data set forth in Rule 6540(c)(1); specifically, the security 
identifier specified in Rule 6530(a)(2)(A) or (B) that FINRA 
determines is appropriate to disseminate and the aggregate volume of 
securities subject to an Initial Covered Securities Loan or 
modification to the amount of Reportable Securities loaned, reported 
on the prior business day.
    \34\ Loan rate distribution data generally consists of: (1) the 
security identifier specified in Rule 6530(a)(2)(A) or (B) that 
FINRA determines is appropriate to identify the relevant Reportable 
Security; (2) the highest rebate rate, lowest rebate rate, and 
volume weighted average of the rebate rates by U.S. currency and 
non-U.S. currency, as applicable, reported for Initial Covered 
Securities Loans collateralized by cash and for Loan Modifications 
collateralized by cash (where the Loan Modification involved a 
change to the rebate rate); and (3) the highest lending fee or rate, 
lowest lending fee or rate, and volume weighted average of the 
lending fees or rates reported for Initial Covered Securities Loans 
not collateralized by cash and for Loan Modifications not 
collateralized by cash (where the Loan Modification involved a 
change to the lending fee or rate).
    \35\ A ``Tax-Exempt Organization'' means an organization that is 
described in Section 501(c) of the Internal Revenue Code (26 U.S.C. 
501(c)) and has received recognition of the exemption from federal 
income taxes from the Internal Revenue Service. See Proposed Rule 
7720(e)(3).
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    Under proposed Rule 7720(c)(1)(A), a fee of $3,000 per month will 
apply for daily receipt of the SLATE Loan-Level Data and Daily Loan 
Statistics, except for qualifying Tax-Exempt Organizations. The data is 
enabled for unlimited internal use through any number of display 
applications; separate fees and uses apply to qualifying Tax-Exempt 
Organizations (as discussed below). As further provided in proposed 
Rule 7720(c)(1)(A), the fee of $3,000 per month entitles subscribers to 
use SLATE Loan-Level Data and Daily Loan Statistics in one or more of 
the following ways: internal operational and processing systems, 
internal monitoring and surveillance systems, internal price 
validation, internal portfolio valuation services, internal analytical 
programs leading to purchase/sale or other trading decisions, and other 
related activities, and the repackaging of market data for delivery and 
dissemination outside the organization, such as indices or other 
derivative products. Bulk redistribution of SLATE Loan-Level Data and 
Daily Loan Statistics \36\ is not permitted under this subscription 
type, which is limited to internal use. In addition, any derivative 
products shall not permit end users to determine underlying SLATE Loan-
Level Data and Daily Loan Statistics.
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    \36\ Bulk redistribution of SLATE data refers to the 
redistribution of the SLATE data files described in proposed Rule 
7720. Bulk redistribution of SLATE data generally is not permitted, 
except for qualifying Tax-Exempt Organizations, subject to specified 
restrictions, as described in proposed Rule 7720(c)(2) and (d)(2).
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    Under proposed Rule 7720(c)(1)(B), a vendor display redistribution 
fee of $10,000 per month will apply for the display of SLATE Loan-Level 
Data and Daily Loan Statistics through any number of external display 
applications. However, bulk redistribution of SLATE Loan-Level Data and 
Daily Loan Statistics is not permitted. Therefore, any party wishing to 
receive a distribution of SLATE Loan-Level Data and Daily Loan 
Statistics files must subscribe directly with FINRA.
    Proposed Rule 7720(c)(2) establishes a monthly fee of $1,500 
applicable to qualifying Tax-Exempt Organizations for the daily receipt 
of SLATE Loan-Level Data and Daily Loan Statistics. FINRA is 
establishing a fee level for qualifying Tax-Exempt Organizations that 
is half of the fee that will be assessed on parties other than 
qualifying Tax-Exempt Organizations. The data is enabled for unlimited 
internal use. A Tax-Exempt Organization qualifies to receive SLATE 
Loan-Level Data and Daily Loan Statistics if it does not redistribute 
such data in bulk, or it redistributes such data in bulk or otherwise 
(e.g., unlimited external display) at no charge solely to other

[[Page 93753]]

Tax-Exempt Organizations that agree to be subject to the same 
restrictions.
Historic SLATE Data
    FINRA also is proposing Rule 7720(d) to establish the Historic 
SLATE Data product with associated fees. As defined in Rule 7720(e)(1), 
``Historic SLATE Data'' means ``SLATE Loan-Level Data and Daily Loan 
Statistics'' from the beginning of SLATE data reporting (currently 
scheduled to commence on January 2, 2026) through the end of the most 
recent calendar year. Historic SLATE Data will be made available within 
one month of year-end (e.g., Historic SLATE Data for calendar year 2026 
will be available by January 31, 2027; Historic SLATE Data for calendar 
year 2027 will be available by January 31, 2028, and so on). Proposed 
Rule 7720(d) sets forth the fees for Historic SLATE Data applicable to 
subscribers that are persons and organizations other than qualifying 
Tax-Exempt Organizations, and subscribers that are qualifying Tax-
Exempt Organizations. Recipients of the Historic SLATE Data product 
described herein will be required to execute appropriate agreements 
with FINRA.
    Under proposed Rule 7720(d)(1)(A), a single fee of $2,000 will 
apply to persons or organizations other than qualifying Tax-Exempt 
Organizations for development and set-up to begin receiving Historic 
SLATE Data. The set-up fee is a one-time fee. Proposed Rule 
7720(d)(1)(B) provides that a fee of $5,000 per calendar year will 
apply for receipt of Historic SLATE Data, except for qualifying Tax-
Exempt Organizations. The data is enabled for unlimited internal use 
through any number of display applications. As further provided in 
proposed Rule 7720(d)(1)(B), the fee of $5,000 per calendar year 
entitles persons or organizations other than qualifying Tax-Exempt 
Organizations to use Historic SLATE Data in one or more of the 
following ways: internal operational and processing systems, internal 
monitoring and surveillance systems, internal price validation, 
internal portfolio valuation services, internal analytical programs 
leading to purchase/sale or other trading decisions, and other related 
activities, and the repackaging of market data for delivery and 
dissemination outside the organization, such as indices or other 
derivative products. Bulk redistribution of Historic SLATE Data is not 
permitted under this subscription type, which is limited to internal 
use. In addition, any derivative products shall not permit end users to 
determine underlying SLATE Loan-Level Data and Daily Loan Statistics.
    Proposed Rule 7720(d)(2) establishes the fees applicable to 
qualifying Tax-Exempt Organizations for receipt of Historic SLATE Data. 
A Tax-Exempt Organization qualifies to receive Historic SLATE Data if 
it does not redistribute such data in bulk, or it redistributes such 
data in bulk or otherwise at no charge solely to other Tax-Exempt 
Organizations that agree to be subject to the same restrictions. Under 
proposed Rule 7720(d)(2)(A), a single fee of $1,000 will apply to any 
qualifying Tax-Exempt Organization for development and set-up to begin 
receiving Historic SLATE Data. The set-up fee is a one-time fee and was 
established to amount to half of the fee that would be assessed on 
parties other than qualifying Tax-Exempt Organizations for data set up. 
Proposed Rule 7720(d)(2)(B) provides that a fee of $2,500 per calendar 
year will apply to any qualifying Tax-Exempt Organization for receipt 
of Historic SLATE Data, which is half of the fee that would be assessed 
on parties other than qualifying Tax-Exempt Organizations for these 
data. Historic SLATE Data is enabled for unlimited internal use and may 
be redistributed by a qualifying Tax-Exempt Organization in bulk or 
otherwise (e.g., unlimited external display) subject to the 
restrictions in paragraph (d)(2) (i.e., redistributed at no charge 
solely to other Tax-Exempt Organizations that agree to be subject to 
the same restrictions prescribed in the rule).
SLATE Cost Recovery
    As further discussed below in the Economic Impact Assessment, the 
proposed fees described herein are designed to permit FINRA to recover 
costs associated with the operation of the SLATE program, as expressly 
permitted for an RNSA under the Exchange Act and SEA Rule 10c-1a.\37\ 
FINRA currently estimates an average of approximately $4.5 million in 
incremental direct ongoing costs per year from 2026 through 2028 
(including the incremental direct ongoing costs incurred in 2024 and 
2025 to be recovered over the 3-year period),\38\ and approximately 
$4.4 million in annual incremental direct ongoing costs thereafter. In 
an effort to make SLATE financially self-sustaining on an ongoing 
basis, the proposed fees are designed to generate an amount of revenue 
that is calibrated to align with the estimated incremental direct 
ongoing costs associated with the SLATE program, to enable FINRA to 
meets its obligations pursuant to the SEA Rule 10c-1a mandate, as 
further described below.
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    \37\ See 10c-1a(i); see also Adopting Release 88 FR 75644, 
75687.
    \38\ While SEA Rule 10c-1a does not require that securities loan 
reporting commence until January 2026 or that loan data 
dissemination commence until April 2026, FINRA has necessarily 
already begun making financial expenditures in response to the SEC's 
adoption of Rule 10c-1a so that FINRA will be positioned to comply 
with all of the obligations applicable to an RNSA under that rule.
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    Specifically, FINRA's incremental direct costs associated with 
operating the SLATE program include costs for cloud resources (compute 
and storage), data validation, business rule processing, reference 
data, data dissemination, billing generation, technology operations 
monitoring and support, and alert escalation and remediation. 
Additional costs include staffing related to product management, 
application management, ongoing business and operational support for 
the user interface, and administration of participant information and 
applicable agreements.\39\
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    \39\ To the extent possible, FINRA will leverage existing 
systems, personnel, and processes in connection with FINRA's SLATE 
program consistent with FINRA's structure as a not-for-profit self-
regulatory organization.
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    FINRA intends to reassess the SLATE reporting fees and data 
products and associated fees after the commencement of SLATE reporting 
and dissemination and obtaining additional information regarding 
reporting volumes and subscription interest. To the extent that FINRA 
determines that a change to the SLATE fee structure would be 
appropriate to better align SLATE revenues with the incremental direct 
ongoing costs incurred in connection with the SLATE program, FINRA 
would file a proposed rule change with the Commission pursuant to 
Section 19(b) of the Exchange Act and Rule 19b-4 thereunder.
    FINRA has filed the proposed rule change for immediate 
effectiveness. The Commission's release adopting SEA Rule 10c-1a 
specified the compliance dates applicable to securities loan reporting 
and data dissemination.\40\ Accordingly, if the Commission approves 
FINRA's proposed rules establishing the reporting and dissemination 
requirements, unless an extension is provided pursuant to Commission 
order, the implementation date of the proposed FINRA rules establishing 
the securities loan reporting fees will correspond to the commencement 
of reporting to SLATE, and the implementation date of the proposed 
FINRA rules establishing the securities loan data products with 
associated fees will correspond to the commencement of SLATE data

[[Page 93754]]

dissemination. If the SEC extends the compliance dates for SEA Rule 
10c-1a's reporting or dissemination requirements, FINRA's proposed 
rules addressing covered securities loan reporting fees and securities 
loan data products with associated fees would become effective 
consistent with the SEC's extended timeframe for reporting and data 
dissemination, respectively.
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    \40\ See supra note 6.
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2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(5) of the Act, which requires, among other 
things, that FINRA rules provide for the equitable allocation of 
reasonable dues, fees, and other charges among members and issuers and 
other persons using any facility or system that FINRA operates or 
controls.\41\ FINRA also believes that the proposed rule change is 
consistent with the provisions of Section 15A(b)(6) of the Act, which 
requires, among other things, that FINRA rules are not designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers.\42\
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    \41\ 15 U.S.C. 78o-3(b)(5).
    \42\ 15 U.S.C. 78o-3(b)(6).
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    Consistent with Section 984(b) of the Dodd-Frank Act, which 
mandates that the Commission increase the transparency of information 
available to brokers, dealers, and investors regarding securities loan 
activity, on October 13, 2023, the Commission adopted SEA Rule 10c-
1a.\43\ SEA Rule 10c-1a requires a Covered Person who agrees to a 
Covered Securities Loan to provide specified information to an 
RNSA.\44\ The RNSA that is collecting the information required to be 
reported under the rule is then required to make publicly available 
information regarding reported securities loans, as described in SEA 
Rule 10c-1a.\45\ Because FINRA is an RNSA, FINRA proposed to adopt the 
SLATE rules and is building a system (the proposed SLATE system) to 
which Covered Securities Loan information would be reported. SEA Rule 
10c-1a sets forth other related requirements for an RNSA, as described 
in SEA Rule 10c-1a and the Adopting Release.\46\ These mandates 
increase costs to FINRA, as an RNSA, that necessitate funding.
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    \43\ See generally Adopting Release, 88 FR 75644. See also 
Public Law 111-203, 124 Stat. 1376 (2010).
    \44\ See SEA Rule 10c1-a(a)(1).
    \45\ See SEA Rule 10c-1a(g).
    \46\ As noted above, SEA Rule 10c-1a anticipates that an RNSA 
will propose rules consistent with the Commission's mandate. See SEA 
Rule 10c-1a(i). Section 984(a) of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act (``Dodd-Frank Act'') added section 
10(c)(1) to the Exchange Act to provide the Commission with 
authority over securities lending. See 15 U.S.C. 78j(c)(1). Section 
984(b) of the Dodd-Frank Act mandates that the Commission increase 
the transparency of information available to brokers, dealers, and 
investors with respect to the loan or borrowing of securities. See 
Public Law 111-203, 124 Stat. 1376 (2010).
---------------------------------------------------------------------------

    Section 15A(b)(2) of the Act requires that an RNSA be ``so 
organized and [have] the capacity to be able to carry out the 
purposes'' of the Act and ``to comply, and . . . to enforce compliance 
by its members and persons associated with its members,'' with the 
provisions of the Exchange Act.\47\ FINRA therefore believes it is 
consistent with the Act that FINRA impose reasonable fees that are 
designed to support FINRA with regard to expenditures to meet its 
regulatory obligations in connection with the securities loan reporting 
and transparency initiative. In addition, FINRA notes that SEA Rule 
10c-1a itself explicitly provides that the RSNA may establish and 
collect reasonable fees, pursuant to rules that are promulgated 
pursuant to Section 19(b) and Rule 19b-4 of the Exchange Act.\48\
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    \47\ 15 U.S.C. 78o-3(b)(2).
    \48\ See SEA Rule 10c-1a(i).
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    As discussed above, and further below in the Economic Impact 
Assessment, FINRA is establishing a fee structure to implement 
reasonable fees relating to the SLATE program; specifically: (1) SLATE 
system connectivity fees; (2) fees in connection with reporting Covered 
Securities Loan information to SLATE; and (3) SLATE data products and 
associated fees. The fees being proposed herein are reasonable, 
including because they are designed to generate an amount of revenue 
that is calibrated to align with the estimated incremental direct 
ongoing costs associated with the SLATE program and to enable FINRA to 
meet its regulatory obligations.
    FINRA believes it is equitable, reasonable, and consistent with the 
Exchange Act that the proposed SLATE system connectivity and reporting 
fees be assessed directly on the parties that have been designated by 
the Commission as bearing the underlying regulatory responsibility for 
reporting securities loan information to an RNSA--i.e., Covered Persons 
that report to the SLATE system (and their agents).\49\ In the Adopting 
Release, the Commission stated that ``. . . RNSAs may establish and 
collect reasonable fees, pursuant to rules that are effective pursuant 
to section 19(b) of the Exchange Act and Rule 19b-4 thereunder, from 
each person who provides any data set forth in paragraphs (b) through 
(e) of this section directly to an RNSA.'' \50\ The Adopting Release 
also stated that ``[t]the final rule will also impose direct costs on 
an RNSA responsible for collecting, maintaining, and distributing the 
data, who may pass on these costs by imposing fees on entities that 
provide Rule 10c-1a information to an RNSA and/or consumers of Rule 
10c-1a data.'' \51\
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    \49\ ``Under the Exchange Act, RNSAs are allowed to adopt rules 
that impose the equitable allocation of reasonable fees among 
members and issuers, and other persons that use an RNSA facility or 
system.'' (citation omitted). See Adopting Release, 88 FR 75644, 
75687.
    \50\ See Adopting Release, 88 FR 75644, 75687.
    \51\ See Adopting Release, 88 FR 75644, 75693.
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    FINRA also believes that it is equitable, reasonable, and 
consistent with the Exchange Act to require that the parties reporting 
data to SLATE be directly responsible for paying SLATE fees because the 
reporting process is a primary driver of the costs that the proposed 
fees are intended to recover. Thus, assessing the SLATE system 
connectivity and reporting fees on Covered Persons (and their agents) 
aligns the direct responsibility for SLATE cost recovery with the 
parties generating the information collection costs.\52\
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    \52\ FINRA understands that many members shift at least some of 
the regulatory fees incurred to other parties. For instance, it is 
regular practice among clearing and trading firms to ``pass 
through'' the Trading Activity Fee (``TAF'') to the underlying firm 
executing the trade. Further, FINRA understands that executing firms 
commonly pass the TAF directly on to their customers. See Securities 
Exchange Act Release No. 90176 (October 14, 2020), 85 FR 66592, 
66603 (October 20, 2020) (Notice of Filing and Immediate 
Effectiveness of File No. SR-FINRA-2020-032). ``The entities that 
provide Rule 10c-1a information to an RNSA may absorb these costs in 
the form of lower profits or may pass them on to their customers in 
the form of increased fees for broker-dealer services or lending 
program services.'' See Adopting Release 88 FR 75644, 75693.
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    The proposed SLATE data products are offered on equal terms to 
similarly situated parties that choose to access the data products. 
Thus, FINRA believes that the proposed SLATE data fees are not designed 
to permit unfair discrimination between customers, issuers, brokers, or 
dealers, as provided for in Section 15A(b)(6).\53\ Under the proposal, 
with one exception (qualifying Tax-Exempt Organizations), the content 
of the information in the data products and the data products' usage 
rights are offered on the same terms to interested parties. Thus, any 
party (except for a qualifying Tax-Exempt Organization) that seeks to 
access SLATE Loan-Level Data and Daily Loan Statistics will pay a fee 
depending upon whether such party seeks the right to use the data 
solely internally, as described in

[[Page 93755]]

proposed Rule 7720(c)(1)(A) ($3,000 per month), or whether such party 
seeks the right to display the data externally, as described in 
proposed Rule 7720(c)(1)(B) ($10,000 per month).\54\ The higher fee of 
$10,000 per month proposed in Rule 7720(c)(1)(B) is not unfairly 
discriminatory (as compared to the $3,000 per month fee for internal 
use only) given the significantly expanded usage rights authorized 
under proposed Rule 7720(c)(1)(B), which permits the display of SLATE 
Loan-Level Data and Daily Loan Statistics through any number of 
external display applications.\55\ All interested parties (except 
qualifying Tax-Exempt Organizations) will be assessed the same fee, 
with the same usage rights, for Historic SLATE Data.
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    \53\ 15 U.S.C. 78o-3(b)(6).
    \54\ See proposed Rule 7720(c)(1)(A)-(B).
    \55\ See proposed Rule 7720(c)(1)(B).
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    Proposed Rule 7720 would apply a lower fee to qualifying Tax-Exempt 
Organizations for both the SLATE Loan-Level Data and Daily Loan 
Statistics as well as the Historic SLATE Data. As is the case with 
other data products offered by FINRA, e.g., TRACE,\56\ FINRA offers 
data products at a reduced fee to qualifying Tax-Exempt Organizations 
that have received recognition of the exemption from federal income 
taxes from the Internal Revenue Service.\57\ In the proposed rule 
change, FINRA has established the proposed fees applicable to 
qualifying Tax-Exempt Organizations as half of the amounts that will be 
assessed to parties other than qualifying Tax-Exempt Organizations. 
FINRA also notes that Tax-Exempt Organizations only qualify for the 
reduced fees offered under the rule if they do not redistribute the 
data in bulk, or redistribute the data in bulk or otherwise at no 
charge solely to other Tax-Exempt Organizations that agree to be 
subject to the same restrictions.\58\ FINRA believes this aspect of the 
proposed rule change is appropriate given the not-for-profit nature of 
such organizations and therefore is not designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers, as 
provided for in Section 15A(b)(6).\59\
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    \56\ See Rule 7730(d)(1)(B).
    \57\ See supra note 35.
    \58\ See proposed Rule 7720(c)(2) and (d)(2).
    \59\ 15 U.S.C. 78o-3(b)(6).
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    FINRA also believes that the amounts of the proposed SLATE fees are 
equitable, reasonable, and consistent with the Exchange Act. As further 
discussed in the Economic Impact Assessment, in developing reporting 
activity estimates, FINRA used data gathered through outreach to 
industry participants, including data vendors, agent lenders, prime 
brokers, retail brokers, and beneficial owners. FINRA believes that the 
proposed SLATE data subscription fees also are reasonable given the 
usage rights and the use cases for the data. Because the proposed SLATE 
data products are a new product offering, it is difficult to estimate 
subscription levels and associated revenue. In addition, based on 
FINRA's experience, subscribership to data products may be slower 
initially, with interest building over time. As a result, FINRA has 
initially sought to rely primarily on revenues through SLATE reporting 
to offset the costs that FINRA seeks to recover in connection with the 
SEA Rule 10c-1a mandate. As such, the proposed fees generally are 
consistent with FINRA's efforts to align its operating expenses with 
its operating revenues, target break-even cash flows, and continue to 
responsibly manage expenses driven by mandatory initiatives in a manner 
consistent with FINRA's public Financial Guiding Principles.\60\ The 
proposed SLATE fees will be applied consistently to all similarly 
situated parties that are required to report Covered Securities Loans 
(and their agents) (i.e., SLATE Participants) and to those that choose 
to subscribe to SLATE data products.\61\
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    \60\ See FINRA's Financial Guiding Principles, https://www.finra.org/sites/default/files/finra_financial_guiding_principles_0.pdf. As discussed above, FINRA 
intends to reassess the SLATE reporting fees and data products and 
associated fees after gaining experience with the operation of SLATE 
and obtaining additional information regarding reporting volumes and 
subscription interest. To the extent that FINRA determines that a 
change to the SLATE fee structure would be appropriate to better 
align SLATE revenues with the incremental direct ongoing costs 
incurred in connection with the SLATE program, FINRA would file a 
proposed rule change with the Commission pursuant to Section 19(b) 
of the Exchange Act and Rule 19b-4 thereunder.
    \61\ The proposed data products will be offered on the same 
terms to any similarly situated party that seeks to subscribe.
---------------------------------------------------------------------------

    For the reasons discussed herein, FINRA believes that the proposed 
rule change is consistent with Section 15A(b)(5) of the Exchange Act, 
including that the proposal provides for the equitable allocation of 
reasonable dues, fees and other charges among members and issuers and 
other persons using any facility or system that FINRA operates or 
controls.\62\ FINRA likewise believes that the proposed rule change is 
consistent with Section 15A(b)(6) of the Act, which requires, among 
other things, that FINRA rules are not designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers.\63\
---------------------------------------------------------------------------

    \62\ 15 U.S.C. 78o-3(b)(5).
    \63\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    Section 15A(b)(9) of the Act requires that FINRA's rules not impose 
any burden on competition that is not necessary or appropriate in 
furtherance of the purpose of the Exchange Act.\64\ FINRA does not 
believe that the proposed rule change will result in any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act.
---------------------------------------------------------------------------

    \64\ 15 U.S.C. 78o-3(b)(9).
---------------------------------------------------------------------------

Economic Impact Assessment
    FINRA has undertaken an economic impact assessment, as set forth 
below, to analyze the regulatory need for the proposed rule change, its 
potential economic impacts, including distributional and competitive 
effects, and the alternatives considered in assessing how to best meet 
FINRA's regulatory objectives. The regulatory need is discussed above.
Economic Baseline
    In its Adopting Release, the SEC estimated that 609 Covered Persons 
and Reporting Agents would be affected by SEA Rule 10c-1a, of which 255 
were Providing Covered Persons, 248 were Non-Providing Covered Persons, 
and 106 were Reporting Agents.\65\ FINRA has estimated that 
approximately 125,000 Initial Covered Securities Loan reports and 
200,000 Loan Modification reports per day may be reported to SLATE.\66\ 
FINRA estimates that approximately 0.5% of Initial Covered Securities 
Loan reports and Loan Modification reports could result in corrections, 
cancellations, or deletions, and approximately 0.5% could be reported 
late.\67\ FINRA anticipates that the volume of erroneous and late 
reports

[[Page 93756]]

will decrease over time as Covered Persons gain experience with SLATE 
reporting.
---------------------------------------------------------------------------

    \65\ ``Providing Covered Persons'' would provide information 
directly to an RNSA while ``Non-Providing Covered Persons'' would 
use a reporting agent to provide information to an RNSA. See 
Adopting Release, 88 FR 75644, 75718. ``Reporting Agent'' is defined 
in SEA Rule 10c-1a(j)(4).
    \66\ The quantity of Loan Modification reports will be impacted 
by Covered Persons' reporting decisions, among other factors. For 
example, the extent to which Covered Persons choose to report rates 
as a spread to benchmark will affect the quantity of Loan 
Modification reports due to be reported, which in turn will impact 
fee revenues.
    \67\ This estimate is based on FINRA's experience with TRACE 
reporting. As of August 2024, the correction rate was approximately 
0.8% for corporate bond reports and 0.68% for U.S. Treasury reports. 
The rate of late reports was 0.61% for corporate bonds and 0.42% for 
U.S. Treasury Securities. The correction and late reporting rates 
may be lower for SLATE reporting because proposed Rule 6530 
generally provides a longer timeframe for reporting Covered 
Securities Loans to SLATE than is provided for corporates and U.S. 
Treasury Securities under the TRACE reporting regime.
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Economic Impacts
    The economic impact of the currently proposed reporting fees, data 
products and associated subscription fees are discussed below.
SLATE Reporting Fees
    As discussed above, Covered Persons will incur fees for reporting 
Initial Covered Securities Loans and Loan Modifications. Specifically, 
FINRA proposes that, for each Initial Covered Securities Loan report, a 
SLATE Participant will be subject to a fee of $0.07 per submission and 
for each Loan Modification report, a SLATE Participant will be subject 
to a fee of $0.03 per submission. FINRA also proposes that a SLATE 
Participant will be charged a cancel, correct, or delete fee of $0.10 
per canceled, corrected, or deleted Covered Securities Loan report, and 
a late fee of $0.20 per Initial Covered Securities Loan or Loan 
Modification that is not reported timely to SLATE.
    Developing estimates for the anticipated number and type of SLATE 
reports is challenging due to the availability of only limited 
information upon which to base estimates. In developing estimates, 
FINRA used data gathered through outreach to industry participants, 
including data vendors, agent lenders, prime brokers, retail brokers, 
and beneficial owners. These estimates were used to develop the 
proposed fee structure, which is intended to align SLATE revenues with 
the incremental direct ongoing costs incurred in connection with the 
SLATE initiative.
    Given the estimated number of reports and proposed reporting fees 
discussed above, FINRA approximates that annual revenues from reporting 
fees would be $2,205,000 for Initial Covered Securities Loan 
reports,\68\ $1,512,000 for Loan Modification reports,\69\ $40,950 for 
corrections, cancellations, and deletions,\70\ and $81,900 for late 
reports.\71\ SLATE Participants will incur a $25 fee per user per month 
for connecting to the SLATE web browser. Given the estimated number of 
Covered Persons and Reporting Agents from the SEC's Adopting 
Release,\72\ FINRA estimates the total connection fees per year would 
be $365,400.\73\ Together, FINRA estimates SLATE reporting fees would 
total $4,205,250 per year.\74\
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    \68\ FINRA arrived at $2,205,000 by multiplying the estimated 
number of daily Initial Loan Reports (125,000) by the proposed fee 
rate of $0.07 by the number of business days per year (252 days).
    \69\ FINRA arrived at $1,512,000 by multiplying the estimated 
number of daily Loan Modification Reports (200,000) by the proposed 
fee rate of $0.03 by the number of business days per year (252 
days).
    \70\ FINRA arrived at $40,950 by multiplying the sum of the 
estimated number of daily Initial Loan Reports (125,000) and the 
estimated number of daily Loan Modification Reports (200,000) by the 
estimated rate of reports requiring a correction, cancellation, or 
deletion (0.5%) by the proposed fee rate of $0.10 by the number of 
business days per year (252 days).
    \71\ FINRA arrived at $81,900 by multiplying the sum of the 
estimated number of daily Initial Loan Reports (125,000) and the 
estimated number of daily Loan Modification Reports (200,000) by the 
estimated rate of late reports (0.5%) by the proposed fee rate of 
$0.20 by the number of business days per year (252 days).
    \72\ See Adopting Release, 88 FR 75644, 75718.
    \73\ FINRA arrived at $365,400 by multiplying the estimated 
number of Covered Persons and Reporting Agents (609) by an assumed 2 
user accounts per Covered Person by the proposed fee rate of $25 per 
month by 12 months per year.
    \74\ FINRA arrived at $4,205,250 by adding the estimated annual 
revenue from reporting fees for Initial Covered Securities Loan 
Reports ($2,205,000), the estimated annual revenue from reporting 
fees for Loan Modification Reports ($1,512,000), the estimated 
annual revenue from correction, cancellation, and deletion fees 
($40,950), the estimated annual revenue from fees for late reports 
($81,900), and the estimated annual revenue from connection fees 
($365,400).
---------------------------------------------------------------------------

    FINRA considered the potential impact of the proposed SLATE 
reporting fee structure on securities lending activities. Covered 
Persons' securities lending activities will impact the amount of 
reporting fees that they would incur. Some types of Covered Persons, 
such as lending agents, may incur relatively larger reporting fees 
compared to other Covered Persons due to their function in the 
securities lending market (e.g., agent lenders generally transact as 
Covered Persons in higher volumes relative to other securities lending 
market participants). Lending agents may pass along fully or partially 
the reporting fees to beneficial owners, for instance, in the form of a 
direct charge or higher fees charged for lending services. The 
reporting fees also may affect how Covered Persons structure or conduct 
their securities lending business--e.g., how lending agents determine 
to structure pool or lending programs. However, Covered Persons' 
choices are also affected by other factors, including counterparty risk 
and business models.
SLATE Data Products and Associated Fees
    As described above, FINRA is proposing to establish SLATE data 
products and associated fees.\75\ Specifically, FINRA is proposing to 
make SLATE Loan-Level Data and Daily Loan Statistics available on a 
subscription basis to qualifying Tax-Exempt Organizations (for $1,500/
month) as well as to persons and organizations other than qualifying 
Tax-Exempt Organizations (for $3,000/month). Also as described above, 
vendors may subscribe to display externally SLATE Loan-Level Data and 
Daily Loan Statistics (for $10,000/month). The proposed SLATE data 
products will enable a broader range of market participants to access 
comprehensive securities lending data than would otherwise be available 
in the absence of the proposed data products, which will further 
enhance market transparency and efficiency. As discussed in the 
Adopting Release, the broader availability of securities lending 
information may lead to increased competition for data analytics 
services as the barriers to entry for providing such services decline 
and new entrants compete to provide analytics services.\76\
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    \75\ Separate from the SLATE data products and associated fees 
proposed herein, FINRA intends to make T+1 data, T+20 data, and 
daily loan statistics available on FINRA's website free of charge 
for personal, non-commercial purposes only. See supra note 21.
    \76\ See Adopting Release, 88 FR 75644, 75712.
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    The proposed fees associated with the SLATE Loan-Level Data and 
Daily Loan Statistics product apply only to market participants that 
choose to subscribe. Market participants likely will assess the costs 
and benefits of having access to these data as compared to their 
existing sources of securities lending data.\77\ Vendors externally 
displaying SLATE Loan-Level Data and Daily Loan Statistics may charge 
for access to SLATE data. If vendors use securities lending data 
obtained from FINRA to replace existing, more expensive sources of 
securities lending data, they may pass some or all of the savings on to 
their clients.
---------------------------------------------------------------------------

    \77\ For a discussion of the current state of transparency in 
securities lending, see Adopting Release, 88 FR 75644, 75696-75700.
---------------------------------------------------------------------------

    As described above, in addition to SLATE Loan-Level Data and Daily 
Loan Statistics, FINRA also will make Historic SLATE Data available: 
(1) to qualifying Tax-Exempt Organizations (for a $1,000 set-up fee and 
$2,500 per calendar year); and (2) to persons and organizations other 
than qualifying Tax-Exempt Organizations (for a $2,000 set-up fee and 
$5,000 per calendar year). Historic SLATE loan information would 
facilitate the availability of securities lending data to interested 
parties, such as academics, in connection with research efforts.\78\
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    \78\ See Adopting Release, 88 FR 75644, 75705, 75717.
---------------------------------------------------------------------------

    Given the substantial uncertainty in future subscribership for new 
data products and the likelihood that interest may grow slowly over 
time, FINRA's

[[Page 93757]]

best and conservative estimation of potential initial future revenues 
from data product subscriptions is $250,000. Together with the 
estimated reporting fee revenues discussed above, FINRA estimates 
approximately $4.2 million in annual revenue from reporting fees and 
$250,000 in revenue from data product subscriptions for total annual 
revenue of approximately $4.5 million. This aligns with FINRA's 
estimated incremental direct ongoing costs of approximately $4.5 
million per year from 2026 through 2028, and approximately $4.4 million 
in incremental direct ongoing costs thereafter.
Alternatives Considered
    In developing the proposed rule change, FINRA considered various 
alternatives and the potential costs and benefits of those 
alternatives. Among other things, FINRA considered a volume-based 
reporting fee structure where reporting fees would vary depending on 
loan size. However, because loan size may not be proportional to the 
potential revenue from reportable securities loans, a volume-based 
reporting fee structure may create distortions in the market. For 
example, the ratio of lending revenue to loan volume for short-term 
financing or balance sheet management is generally lower than for 
securities lending transactions used for accessing hard-to-borrow 
securities. Volume-based reporting fees also could result in a 
substantial concentration of reporting fees on Covered Persons with a 
higher share of large-volume loans. Therefore, FINRA believes that a 
flat fee rate per report will distribute fees in a more equitable 
manner across market participants.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \79\ and paragraph (f)(2) of Rule 19b-4 
thereunder.\80\ At any time within 60 days of the filing of the 
proposed rule change, the Commission summarily may temporarily suspend 
such rule change if it appears to the Commission that such action is 
necessary or appropriate in the public interest, for the protection of 
investors, or otherwise in furtherance of the purposes of the Act. If 
the Commission takes such action, the Commission shall institute 
proceedings to determine whether the proposed rule should be approved 
or disapproved.
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    \79\ 15 U.S.C. 78s(b)(3)(A).
    \80\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-FINRA-2024-020 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-FINRA-2024-020. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of FINRA. Do not include 
personal identifiable information in submissions; you should submit 
only information that you wish to make available publicly. We may 
redact in part or withhold entirely from publication submitted material 
that is obscene or subject to copyright protection. All submissions 
should refer to File Number SR-FINRA-2024-020 and should be submitted 
on or before December 18, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\81\
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    \81\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-27742 Filed 11-26-24; 8:45 am]
BILLING CODE 8011-01-P
```