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The Options Clearing Corporation Receives Approval For New Risk Management Methodology

CHICAGO, March 8, 2006 - The Options Clearing Corporation (OCC) announced today that it has received approval from the Securities and Exchange Commission (SEC) to implement a new risk management methodology for determining the amount of margin deposits required of OCC Clearing Members.

OCC will be the first derivatives clearinghouse in the world to use a large-scale Monte Carlo-based risk management methodology.

This methodology—called "STANS," for System for Theoretical Analysis and Numerical Simulations—will be used to measure the exposure of portfolios of options, futures and cash instruments cleared and carried by OCC on behalf of its Clearing Members.

Using Monte Carlo-based simulation techniques, STANS generates a set of 10,000 hypothetical market scenarios intended to provide a realistic evaluation of risk at the portfolio level. These simulated scenarios incorporate information extracted from the historical behavior of each individual security as well as its relationship to the behavior of other securities. Scenarios are generated for over 7,000 risk factors, including a broad range of individual equities, exchange traded funds, stock indices, currencies and commodity products.

In addition to the base simulation, STANS generates complementary sets of scenarios intended to measure increased portfolio risk given atypical market conditions.

The more accurate margin calculations in STANS should improve the financial stability of the derivatives markets, and produce clearing and settlement efficiencies beneficial to investors.

OCC expects to implement STANS later this year.

About OCC

OCC, founded in 1973, is the world's largest derivatives clearing organization and was the first clearinghouse to receive a 'AAA' credit rating from Standard & Poor's Corporation. Operating under the jurisdiction of the Securities and Exchange Commission and the Commodity Futures Trading Commission, OCC provides clearing and settlement services for the American Stock Exchange, the Boston Options Exchange, Chicago Board Options Exchange, CBOE Futures Exchange, International Securities Exchange, OneChicago, Pacific Exchange, Philadelphia Stock Exchange and Philadelphia Board of Trade. More information about OCC is available through its Web site at