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OCC to Adopt a Policy to Restrict Exercises to Net Long Positions

CHICAGO (May 23, 2013) - OCC announced today that its Board of Directors approved the adoption of a policy that would require clearing members to restrict exercises in certain accounts, including market maker and joint back-office accounts to the extent each respective account is net long at the end of the trading day. The required netting would occur within each options series.

This policy was designed to address certain risks and concerns associated with dividend plays, a controversial but legally permitted options trading strategy that involves the capture of dividend income through the exercise of in-the-money call options on the day prior to the "ex-dividend" date. The strategy usually involves the buying and/or selling of call spreads where both option components are in-the-money and of the same series. Dividend plays represent approximately 8 percent of OCC-cleared options volume. The new policy will likely result in a significant reduction in dividend plays.

The new policy is subject to regulatory approval and the further development of an implementation plan. OCC clearing members will need to make certain systems and other changes to ensure compliance with the policy. OCC will work closely with its clearing firms in determining the required compliance-related changes. OCC will also provide sufficient advance notice of implementation of the new policy to enable clearing members and other market participants to prepare for the change.

About OCC

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