Chicago, Illinois (PRWEB) January 28, 2014
OCC announced today it has received regulatory approvals to clear over-the-counter (OTC) equity index options, bringing capital and operational efficiencies and enhanced customer protections to the equity derivatives marketplace.
OCC plans to launch its OTC S&P 500® equity index option clearing services in the second quarter following the completion of testing with market participants.
On January 9, 2014, the Securities and Exchange Commission (SEC) approved a Securities Investor Protection Corporation (SIPC) rule change broadening the definition of “Standardized Options” under the Securities Investor Protection Act (SIPA) to include OTC options cleared by OCC. This approval enhances the protections afforded to customers in the event of a liquidation of their broker-dealer as standardized OTC options will now be subject to closeout or transfer in a SIPA proceeding.
Regulatory approvals also enable OCC to offer portfolio margining of listed and OTC positions that are held in a single account, which may result in margin offsets and lowering the overall cost of clearing. Additionally, OCC has received SEC approval for changes to its rules to reflect modifications to its margin model for longer tenor options. These options of at least three years, both listed and OTC, will be covered by enhancements to OCC’s risk model in order to better reflect certain risks of longer-tenor options, strengthening risk management across the industry.
“Being the first clearing house in the United States to clear OTC equity index options is an exciting step for OCC,” said Craig Donohue, Executive Chairman of OCC. “As the world's largest equity derivatives clearing house, this is a logical extension of our capabilities."
"OCC has been a leading innovator in the clearing and settlement of equity derivatives for more than 40 years," said Michael Cahill, President and CEO of OCC. "We are pleased to extend the protections of our financial guarantee and our central counterparty role to the OTC equity derivatives market.”
OCC is the world's largest equity derivatives clearing organization. Founded in 1973, OCC operates under the jurisdiction of both the Securities and Exchange Commission (SEC) as a Registered Clearing Agency and the Commodity Futures Trading Commission (CFTC) as a Derivatives Clearing Organization. OCC now provides central counterparty (CCP) clearing and settlement services to 17 exchanges and trading platforms for options, financial and commodity futures, security futures and securities lending transactions. More information about OCC is available at http://www.theocc.com.
Standard & Poor’s and S&P are registered trademarks of Standard & Poor’s Financial Services LLC, a part of McGraw Hill Financial. Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). These trademarks have been licensed to S&P Dow Jones Indices LLC. It is not possible to invest directly in an index. S&P Dow Jones Indices LLC, Dow Jones, S&P and their respective affiliates (collectively “S&P Dow Jones Indices”) do not sponsor, endorse, sell, or promote any investment fund or other investment vehicle that is offered by third parties and that seeks to provide an investment return based on the performance of any index. This document does not constitute an offer of services in jurisdictions where S&P Dow Jones Indices does not have the necessary licenses. S&P Dow Jones Indices receives compensation in connection with licensing its indices to third parties.