Insight
Books and Records Management for Securities Finance
Vaibhav Garg
April 2024
The securities finance industry is constantly evolving, and compliance with regulatory requirements will continue to be a critical aspect of business operations. Firms must be vigilant in maintaining accurate and comprehensive books and records, and EquiLend Spire provides a valuable tool to facilitate this. By leveraging its capabilities, firms can increase efficiency, reduce risk and gain a competitive advantage in the marketplace.
The securities finance market is regulated to ensure integrity, transparency and efficiency while protecting investors. Brokers and dealers must adhere to regulations set by regional regulatory bodies, such as the Securities and Exchange Commission (SEC) in the United States, the Financial Conduct Authority (FCA) in the United Kingdom and the European Securities and Markets Authority (ESMA) in the EU. In the Middle East and Asia, regulations for compliance and record-keeping for brokers and dealers are set by individual countries’ regulatory bodies.
Retaining these records is essential for ensuring compliance with regulatory obligations and safeguarding the firm’s intellectual property. This enables securities regulators with access to accurate and comprehensive data about securities lending activities to identify potential risks and enforce compliance with regulatory mandates.
Compliance and Record-Keeping Obligations for Brokers and Dealers
Regulations such as SEC Rules 17a-3 and 17a-4 in the United States, the Markets in Financial Instruments Directive (MiFID II) in the European Union, the Financial Services and Markets Act 2000 in the United Kingdom and individual country-specific regulations in Asia and the Middle East, prescribe specific requirements for the maintenance, retention and accessibility of records for financial institutions such as lenders, borrowers, brokers and dealers. These regulations mandate the retention of records, including stock certificates, trade confirmations and other records pertinent to the institution’s operations.
They also prescribe guidelines for the storage of these records, including electronic storage requirements (ESM) that must meet certain conditions, such as preservation in non-rewriteable, non-erasable format, serialization and the capacity to download stored records and indexes readily. An audit system that identifies when original and duplicate records are input and any changes to existing records are made is also mandatory to ensure compliance and maintain the integrity of the financial markets.
EquiLend Spire and Books and Records Management
Compliance with regulatory requirements is paramount in the securities finance industry. EquiLend Spire is a comprehensive solution that assists firms in meeting these requirements through its robust reporting capabilities. These features enable firms to effectively manage their books and records and ensure they can meet all the regulatory requirements, such as SEC’s Rules 17a-3 and 17a-4, FINRA Books and Records Checklist and other regulations related to books and record keeping.
- Robust reporting capabilities: EquiLend Spire enables firms to easily generate and track critical information such as collateral balances, cash movements and trade details, which are essential for effective books and records management. EquiLend Spire’s over 300 standard reports and fully customizable options provide comprehensive and accurate information on securities lending activities, critical for effective books and records management.
- Automation Capabilities: EquiLend Spire’s automation capabilities reduce the need for manual intervention, improving data accuracy and reducing the risk of errors and non-compliance.
- A Comprehensive Summary of Securities Lending Activities: EquiLend Spire provides a comprehensive summary of securities lending activities, which enables firms to have a clear and detailed view of their securities lending activities, ensuring that all dividends, rebates, margin and cash collateral reinvestment guidelines are properly collected and managed. EquiLend Spire stores data for up to 10 years, providing firms with a long-term view of their securities lending activities.
- Records Borrow Rates/Fees of Securities: EquiLend Spire records borrow rates/fees of securities, which enables firms to track and manage the cost of their securities lending activities and comply with credit limits as per regulations.
- Track Borrows and Market Orders: EquiLend Spire keeps track of the Borrows and Market Orders, thus enabling firms to effectively manage and track the critical data necessary to make informed business decisions.
- Security and Compliance: EquiLend Spire ensures that all data is stored and transmitted securely, protecting firms from data breaches and ensuring regulatory compliance.
- Integration with other systems: EquiLend Spire easily integrates with other platforms, such as accounting and risk management systems, enabling firms to have a unified view of their books and records and making it easier to manage and analyze data.
- Retention and accessibility of records: EquiLend Spire provides a secure, automated platform for the retention and accessibility of records, ensuring compliance with SEC Rules 17a-3 and 17a-4, as well as other regulatory requirements.
A Comprehensive Solution for Your Books and Records Management:
It is important for firms to stay abreast of regulatory developments and to implement the necessary controls and procedures to ensure compliance. EquiLend Spire, with its advanced features and capabilities, can assist firms in meeting these requirements and improving their overall compliance posture. The platform’s cutting-edge technology empowers securities finance firms to identify and mitigate potential compliance risks with alacrity and efficiency while streamlining compliance-related processes to enhance operational efficiency. Ultimately, by leveraging the full spectrum of EquiLend Spire’s capabilities, firms can satisfy regulatory requirements and gain a strategic advantage in the marketplace.
Who We Are
EquiLend is a global financial technology firm offering Trading, Post-Trade, Data & Analytics, RegTech and Platform Solutions for the securities finance industry. EquiLend has offices in North America, EMEA and Asia-Pacific and is regulated in jurisdictions around the globe. The company is Great Place to Work Certified™ in the U.S., UK, Ireland and India and was named Best Post-Trade Service Provider Globally, Best Market Data Provider Globally and awarded for its Diversity & Inclusion in the Securities Finance Times Industry Excellence Awards 2023.
