OCC Says Listed Options Markets Must Remain Vibrant in the Eyes of Regulators and Investors

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Cites New Survey Results on Importance of Options Industry Council to Investors and Financial Advisors

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At the 2015 Options Industry Conference in Miami, Michael McClain, President and Chief Operating Officer of OCC, the world’s largest equity derivatives clearing organization, today said, “As the foundation for secure markets, it is important for OCC to ensure that the listed options markets remain vibrant and liquid in the eyes of regulators and the investing public.”

Speaking to over 400 retail and institutional investors and financial advisors, McClain noted, “This underscores the importance of continued education. We share your view that a strong education program contributes to better and more effective policy making, and fosters more knowledgeable and prudent investors. To that end, OCC continues to support the work of The Options Industry Council as it relates to education programs and the development of powerful thought leadership, and we applaud the work of our OIC partner exchanges and member firms.”

McClain announced the results of a study fielded by the Leo Burnett Business agency to measure the impact of advertising on The Options Industry Council (OIC).

The study found that the ad campaign increased OIC’s brand awareness among individual investors by 33 percent, with search, magazine, and internet advertisements, including video, were the channels with the highest recall among those surveyed. A significant number of investors are using OIC’s educational services this year compared to last year. OIC saw a significant improvement as a trustworthy expert, empowered educator, and as a recommended and respected organization.

Among financial advisors, the survey results showed that the OIC advertising campaign increased the likelihood of financial advisors to use OIC’s educational offerings in the future by 56 percent. Among financial advisors who already knew of OIC, there was a positive shift in their brand perceptions across several dimensions.

OIC realized a 65 percent increase in being seen as a trustworthy expert, with 55 percent of those surveyed viewing OIC as an industry leader and 42 percent viewing the organization as an innovative source of information. Seventy-four percent of the financial advisors surveyed viewed OIC as an empowering educator, and 44 percent said OIC gave them the confidence to use options. The survey also noted a 39 percent increase in consideration among financial advisors for OIC’s services, and a 33 percent increase in consideration of OIC as an organization they would recommend to others.

McClain told the conferees, “These are very positive results for OIC, and while we are pleased with them, we know we have more work to do if we want OIC to have more impact on your work and in promoting the value of the listed options market. We are committed to creating greater awareness and understanding of the value and importance of these markets with centralized clearing to the investing public and to the global economy.”

McClain said that OCC achieved significant progress and momentum against some of the firm’s key strategic initiatives in 2014: increasing organizational resiliency, enhancing the capital base, and strengthening the governance and management structure. “As a SIFMU, OCC’s highest priority is accelerating the progress we are making in adapting to new regulatory standards and completing our regulatory remediation objectives,” McClain noted. “We made significant headway in 2014; we are past the halfway mark, and we remain fully engaged in this effort. OCC will continue to take the steps necessary to ensure that we remain disciplined in managing costs while strengthening market protections for our stakeholders and our customers.”

McClain highlighted one particular initiative by OCC to support continued growth in the listed options markets and to ensure that OCC has adequate resources. “We increased our committed liquid facilities from $2 to $3 billion with the establishment of an innovative, pre-funded $1 billion committed purchase facility with CalPERS,” he said. “With the phasing in of new bank capital requirements, we anticipate that the supply of committed credit facilities from banks may contract. By working with qualified pension fund counterparties, this new facility fulfills our goal of reducing pro-cyclicality concerns given the significant concentration of our clearing member firms or their affiliates that also participate in our committed bank repurchase facilities, or provide other banking services to OCC. Increasing our total resources through this innovative solution will facilitate the growth of the U.S. options industry and the futures markets that we serve while also enhancing OCC’s resiliency.”

He concluded his remarks by saying the OCC is “committed to providing confidence in the markets we serve through a robust and transparent risk management framework, delivered in an efficient and cost-effective manner. As the foundation for secure markets, we will continue enhance our resiliency, strengthen market protections, and deliver efficiencies for all of our stakeholders, enabling them to better serve their customers. We also will work with you to ensure that continued education about the importance of the listed options markets remains paramount.”

About OCC
OCC is the world’s leading equity derivatives clearing organization. Founded in 1973, OCC operates under the jurisdiction of both the U.S. Securities and Exchange Commission (SEC) as a Registered Clearing Agency, and the U.S. Commodity Futures Trading Commission (CFTC) as a Derivatives Clearing Organization. OCC now provides central counterparty (CCP) clearing and settlement services to 16 exchanges and trading platforms for options, financial futures, security futures and securities lending transactions. More information about OCC is available at http://www.theocc.com.

This web site discusses exchange-traded options issued by The Options Clearing Corporation. No statement in this web site is to be construed as a recommendation to purchase or sell a security, or to provide investment advice. Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options. Copies of this document may be obtained from your broker, from any exchange on which options are traded or by contacting The Options Clearing Corporation, One North Wacker Dr., Suite 500, Chicago, IL 60606 (1-888-678-4667).

© 2015 The Options Clearing Corporation. All rights reserved.

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