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OCC Comments on Decision by Federal Bank Regulatory Agencies to Finalize Rule to Update Calculation of Counterparty Credit Risk for Derivatives Contracts

CHICAGO (November 19, 2019) – OCC, the world's largest equity derivatives clearing organization, today issued the following statement from Executive Chairman Craig Donohue regarding the decision by the federal bank regulatory agencies to finalize the rule to update the calculation of counterparty credit risk for derivatives contracts.

"We commend the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency for finalizing a rule to update how certain bank-affiliated clearing member firms measure counterparty credit risk posed by derivative contracts under the agencies' regulatory capital rules. The new methodology, called the Standardized Approach for Counterparty Credit Risk (SA-CCR), replaces the current exposure methodology (CEM) for calculating exposures to derivatives contracts such as listed options under the capital rules. This action addresses many of the issues OCC and the U.S. listed options industry have highlighted with policymakers for several years. We appreciate the agencies' work to finalize this important measure which will enhance the ability of firms to offer clearance and settlement services to market makers and other liquidity providers who are vital to the functioning of the U.S. listed options market."

About OCC

OCC is the world's largest equity derivatives clearing organization and the foundation for secure markets. 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. Named 2019 Best Clearing House by Markets Media, OCC now provides central counterparty (CCP) clearing and settlement services to 19 exchanges and trading platforms for options, financial futures, security futures, and securities lending transactions. More information about OCC is available at