Regulatory Reporting Changes Coming to North America in 2025

Q4 of 2024 was a period of relative calm in the trade reporting space in North America. The industry was still recovering from the numerous rewrites and REFITs this year in EMEA and APAC, however there were two topics on the minds of organizations in scope for SEC 10c-1a and the CSA rewrite.

For those unfamiliar with SEC 10c-1a, it is a regulation that aims to bring transparency to the securities lending market in the U.S., marking a significant shift in the securities lending landscape.

Initially proposed in 2021, this rule was subsequently adopted by the SEC in October 2023, with an implementation date set for January 2, 2026. FINRA, as the designated RNSA, was tasked with developing and implementing the reporting system and they introduced the Rule 6500 Series (Securities Lending and Transparency Engine or SLATE) on May 1, 2024. Based on industry feedback, certain elements of the Rule 6500 were amended, and a new proposal was subsequently published on November 14, 2024. This included revisions to the format and manner of data collection, establishing fees for data access, and North American Regulations changes to the public dissemination of non-confidential information. The SEC approved these changes on Jan 2, 2025 as outlined below.

Under the approved amendment, several key changes to include:

1. Reporting deadline moved from 8pm EST to 11:59:59 EST on Trade Date
2. Reduction in fields from 48 to 35
3. Removal of lifecycle event reporting
4. Deleting the provision regarding member supervision of reporting agents
5. Revising the aggregate transaction activity provision

Looking ahead, now that the SEC has approved the rule, firms should conduct a thorough review of their existing reporting frameworks under other regulations. For those reporting under SFTR, it will be essential to assess their data sources and determine how to leverage that information for compliance with 10c-1a.

Additionally, firms should review the products currently included in their lending programs to ensure they fall within the new scope and evaluate their trading relationships and counterparty reference data to prepare for the forthcoming changes.

The 12-month implementation will be very tight given that the industry is still waiting for the technical specifications from FINRA.

The other big focus for clients in North America is the CSA rewrite which was introduced July of last year with a 12-month implementation period. That go-live will be July 2025.

The general objective of the rewrite is to really align with industry standards and the CFTC requirements in the U.S. And so, we only see five new Canadian-specific fields being introduced. The vast majority of fields are Critical Data Elements (CDE) and already exist under CFTC, ESMA or other regulatory requirements in relative terms compared to the EMIR REFIT or the MAS/ASIC rewrites, the CSA REFIT is a lighter lift, however there are some nuances and new requirements that are critical.

One interesting consideration under the CSA rewrite is that open positions are not required to be upgraded to the new requirements. This differs to what we have seen in other jurisdictions.

The other requirement that’s being introduced is a requirement for UPI, which is a unique product identifier to be reported.

One big piece to be mindful of in Canada that is going to be impactful to a lot of firms are the verification requirements that are being introduced as well as the focus on errors and omissions. On the verification requirements, this is really aligning with what we’re seeing in the U.S. with CFTC, but also what we’re seeing in Europe with ESMA, which is requiring firms to verify the data that’s being reported into the trade repository.

In Canada, it’s a smaller universe of firms that are impacted. It’s primarily on the derivative dealers and the clearing agencies that need to verify the data. And this is something that already exists in other jurisdictions. The focus here is on building a process around the frequency of the control, what firms are actually checking, evidencing what’s being found during these reviews and how are firms are remediating these. These are all things that the regulators are likely to be interested in.

And the other important factor coming in for Canada, is the new errors and omissions requirement. Again, this is a similar requirement to what the industry is doing in the U.S., when an error or an omission is identified, the reporting counterparty would actually need to notify the regulators in Canada. Depending on the province or territory that firms operate in Canada, firms would need to notify the relevant regulator. This requirement is unique in Canada because there is a threshold determination of materiality that firms need to make on whether or not it needs to be disclosed to the regulators.