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OCC cleared for OTC equity index options
29 January 2014
OTC S&P 500 to launch in Q2 2014
equity index options
OCC has received regulatory approvals to clear
over-the-counter (OTC) equity index options. It plans to launch
its OTC S&P 500 equity index option clearing services in
the second quarter following the completion of testing with
On 9 January, the Securities and Exchange Commission (SEC)
approved a Securities Investor Protection Corporation rule
change broadening the definition of 'standardised 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 standardised 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.
"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 OCC.