News on Securities Finance Regulations | SFS: Industry regulations pose challenges for companies

Rule 10c-1a “will be transformational,” said Igor Kaplun, global head of business development at S&P Global Market Intelligence Cappitech, at the Securities Finance Symposium.

The new regulation was introduced by the Securities and Exchange Commission (SEC) to increase transparency in the market. Requires a reporting entity to report information to a registered national securities association (RNSA) by the end of the same day as the transaction occurs.

The panel discussion focused on the challenges inherent in this regulation. Jonathan Lee argued that the rule was “more complex” than it first appeared: “It will be expensive to implement and difficult to implement in practice,” he explained.

The panel agreed, predicting that an extension would be necessary for market participants to respond effectively.

Another panelist was more optimistic, claiming that regulation would be an opportunity to improve the market situation. He explained how companies struggle with data quality and suggested that the new regulation could help alleviate this problem.

In the second half of the panel, discussion turned to the Office of Financial Research (OFR) final rule adopted on May 6.

According to OFR, the final rule aims to improve transparency in the U.S. repo market by establishing a data collection system for non-centrally cleared bilateral transactions.

However, once again, panelists expressed similar concerns. Jonathan Lee’s discussion of the various ways this principle manifests itself, including daily reporting to OFR by U.S. reporters, sparked an audible response from viewers.

Lee described the “rude awakening” this rule would cause for various market participants. “Companies have very little time to implement reporting, which will be subject to detailed analysis,” he said.

“This won’t just happen in the US, but on a global scale. This is very much the front and center of systemic risk.”

Despite the panel’s consideration of the challenges posed by upcoming regulations, Kaplun maintained a balanced stance on the regulatory process.

“The first implementation will never be perfect,” he argued, highlighting the various changes that have been made to the regulations over the past year in different jurisdictions.

“The regulator’s goal is to use this data to monitor systemic risk. It’s not just about inputting data, but asking, does this data make sense and what does it say?”