Overview
On April 2, 2026, FINRA Rule 6540 under the new SLATE (Securities Lending and Transparency Engine) Rule 6500 Series will take effect, ushering in a new era of regulatory transparency in the securities lending market. Mandated by SEC Rule 10c-1a under the Securities Exchange Act of 1934, FINRA's new framework sets out detailed reporting and public dissemination requirements for securities loans and their modifications. These changes represent a significant expansion in regulatory oversight and transparency and will affect broker-dealers, agent lenders, institutional investors, and other market participants engaged in securities lending.
This guide outlines the obligations, timeline, mechanics, legal challenges, and implications of Rule 6540 in a comprehensive manner, providing all the information market participants need to comply and strategize under the new regime.
Legal Background: SEC Rule 10c-1a and the Mandate for SLATE
On October 13, 2022, the SEC adopted Rule 10c-1a, requiring covered persons to report detailed information on securities lending transactions to a registered national securities association (i.e., FINRA). The purpose of Rule 10c-1a is to enhance transparency in the securities lending market by:
- Improving data available to investors and regulators
- Facilitating price discovery
- Promoting fair competition and systemic risk monitoring
FINRA's SLATE facility was created to meet this mandate, and the 6500 Rule Series (including Rule 6540) was formally approved by the SEC on January 2, 2025.
The rule's implementation is set for January 2, 2026, with public dissemination of data to begin on April 2, 2026.
Applicability: Who Must Report?
Covered Persons under Rule 10c-1a include the lender in a securities loan, unless an intermediary (such as an agent lender) is used. If the borrower is a broker-dealer borrowing fully paid or excess margin securities under Rule 15c3-3(b)(3), the borrower becomes the Covered Person.
Participants in securities lending programs, including broker-dealers, custodians, agent lenders, and other institutional players, must:
- Assess whether they qualify as a Covered Person
- Determine their reporting obligations under Rule 10c-1a and Rule 6540
- Register as SLATE Participants
- Implement systems and policies to comply with new reporting timelines
Reporting Mechanics: SLATE Rule 6540
Rule 6540 details how loan data will be disseminated to the public in three distinct phases:
(a) Next-Day Dissemination (Excludes Loan Amount)
By the morning after reporting:
- FINRA will publicly disclose:
- Unique loan ID
- Security identifier (e.g., CUSIP, ISIN)
- All data elements (excluding the number of shares loaned)
(b) 20-Day Delayed Dissemination (Includes Loan Amount)
Twenty business days after the loan or modification:
- FINRA will disclose:
- Loan amount (number of shares)
- Loan ID
- Security identifier
(c) Daily Loan Statistics
- Aggregate Volume Data: For securities with at
least 10 distinct loan identifiers (de minimis threshold), FINRA
will publish:
- Total number of shares loaned
- Security identifier
- Rate Distribution Data: For both cash and
non-cash collateralized loans:
- Highest, lowest, and volume-weighted average rebate rates or lending fees
- Segregated by U.S. and non-U.S. currency
(d) Confidentiality
FINRA will not disseminate Confidential Data Elements reported to SLATE.
Key Compliance Requirements
1. SLATE Registration and Reporting
- Covered Persons must register as SLATE Participants
- Pay applicable SLATE reporting fees (FINRA Rule 6520)
- Comply with cybersecurity and physical security protocols
2. Use of Reporting Agents or Third-Party Vendors
- Permissible under Rule 10c-1a and FINRA Rule 6520(b)
- Must enter into written agreements and provide access to reportable data
- Covered Persons retain ultimate responsibility
3. Recordkeeping and Monitoring
- Maintain documentation of all reported loans and modifications
- Monitor vendor activity if using third-party agents
- Audit compliance programs to ensure timeliness and completeness of reporting
Summary of Amendments Since Proposal
The final rule differs meaningfully from FINRA's original proposal:
- Removed unnecessary data elements (e.g., settlement date)
- Made de minimis volume threshold mandatory (≥10 loans per security)
- Clarified obligations for firms using reporting agents
- Removed granular volume subcategories
These changes reflect FINRA's effort to align its SLATE rules strictly with the SEC's 10c-1a requirements, reducing duplicative or burdensome reporting.
Litigation Watch: Legal Challenges to Rule 10c-1a
Status: Ongoing
Rule 10c-1a is currently the subject of a legal challenge in the U.S. Court of Appeals for the Fifth Circuit. Petitioners argue that the SEC exceeded its statutory authority in adopting the rule. As of July 2025, the litigation remains pending. Unless vacated or stayed by court order, the rule will go into effect as scheduled on January 2, 2026.
This follows the same Fifth Circuit's recent decision in National Association of Private Fund Managers v. SEC, Case No. 23-60626, where the court vacated a different set of SEC rules on similar grounds. That precedent may shape the outcome of the 10c-1a challenge.
Strategic Considerations for Market Participants
With implementation just months away, firms should act now to:
- Assess Coverage: Identify all reportable loans and determine who the Covered Person is
- Update Systems: Ensure data collection and transmission capabilities match SLATE requirements
- Develop Policies: Create or update compliance manuals to reflect reporting and oversight obligations
- Train Staff: Educate personnel across operations, legal, and compliance functions
- Monitor Litigation: Stay abreast of court decisions that may impact timing or substance of Rule 10c-1a and Rule 6540
Final Thoughts
Rule 6540 marks a watershed moment in securities lending regulation. By coupling near real-time reporting with public transparency, the SLATE framework is designed to modernize and standardize securities lending disclosures. Although compliance will require significant investment from market participants, the increased visibility into loan activity is expected to benefit market structure, price discovery, and systemic risk monitoring.
However, the final shape of this regime still depends on the resolution of litigation in the Fifth Circuit. In the meantime, prudent firms should prepare for full implementation while remaining flexible should the legal landscape change.
For personalized guidance or compliance planning, please contact Anderson P.C.
Cited Authorities
- FINRA Rule 6540, SR-FINRA-2024-007 (effective April 2, 2026)
- FINRA Rule 6530(a)(2) and (b)(2)
- FINRA Rule 6520(a), (b), (c)
- SEC Rule 10c-1a, 17 C.F.R. § 240.10c-1a
- National Association of Private Fund Managers et al. v. SEC, Case No. 23-60626 (5th Cir. 2024)
- FINRA Notice of Partial Amendment No. 1 to SR-FINRA-2024-007, Nov. 15, 2024
- SEC Order Approving FINRA Rule 6500 Series, Jan. 2, 2025
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
