Proposed Rule Change to Adopt FINRA Rule 4321 and Amend FINRA Rule 4560
Summary
SIFMA 1 provided comments to the U.S. Securities and Exchange Commission (SEC) in response to the filing by the Financial Industry Regulatory Authority, Inc. (FINRA) to amend FINRA Rule 4560 (Short-Interest Reporting) and to adopt FINRA Rule 4321 (Allocations of Fail to Deliver Positions). 2
Excerpt
The Proposal is closely related to separate, ongoing Commission initiatives to require reporting and dissemination of gross settled short position information and related short activity information, as well as of securities lending activity. Specifically, in October 2023, the Commission adopted Rule 13f-2 (Short Position and Short Activity Reporting by Institutional Investment Managers) and Rule 10c-1a (Reporting of Securities Loans) to increase regulatory and public transparency of short sale and securities lending information. As discussed below, the Commission subsequently delayed the compliance dates for these rules until 2028 and is considering amending each of these rules. 3 Given the uncertain status of Rules 13f-2 and 10c-1a (including the possibility of forthcoming material amendments), and the potential for duplicative reporting and dissemination of short position-related information under FINRA and Commission rules, it is difficult for SIFMA and other public commenters to analyze how these separate regimes will overlap with each other. 4
reporting and dissemination regimes, we urge the Commission to disapprove it.
- SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s one million employees, we advocate on legislation, regulation and business policy affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA).
- Notice of Filing of a Proposed Rule Change To Adopt FINRA Rule 4321 (Allocations of Fail To Deliver Positions) and Amend FINRA Rule 4560 (Short-Interest Reporting), Release No. 34-105482 (May 13, 2026), 91 FR 28699 (May 18, 2026)
- See Order Granting Temporary Exemptive Relief, Pursuant to Sections 13(f)(3) and 36(a)(1) of the Securities Exchange Act of 1934 from Compliance with Rule 13f-2 and Form SHO, and Pursuant to Section 36(a)(1) of the Securities Exchange Act of 1934 from Certain Aspects of Rule 10c-1a, Release No. 34-104303 (Dec. 3, 2025), 90 FR 56813 (Dec. 8, 2025) (“SEC Exemptive Order”).
- For purposes of this letter, SIFMA is using “Rule 10c-1a” to refer collectively to the SEC’s covered securities loan reporting regime under Rule 10c-1a and the Securities Lending and Transparency Engine reporting regime under the FINRA Rule 6500 Series (“SLATE Rules”) that FINRA, as the registered national securities association charged with collecting and publicly disseminating covered securities loan information, has implemented. While in implementing the current SLATE Rules, FINRA sought to adhere closely to the requirements in Rule 10c-1a, SIFMA notes that should FINRA propose any rule changes to the SLATE Rules that implicate arranged financing transactions, that could add yet another rule set to the mix.