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OCC/Market Loan Program FAQs

What Loan Markets are cleared by OCC?
OCC currently clears securities lending transactions for Automated Equity Finance Markets, Inc., a subsidiary of Quadriserv, Inc., which operates AQS®, an automated marketplace for securities lending and borrowing. AQS matches lenders and borrowers in an exchange-like platform using automated liquidity and price discovery mechanisms. The resulting matched loans are processed through OCC which provides CCP guarantees and trading anonymity. Post-transaction reporting capabilities include real-time reporting of executed transactions, stock and cash movements through the Depository Trust Company ("DTC"), as well as record keeping and reporting via industry standard formats. Please visit the AQS website for more detailed information.

What is OCC's role as a Central Counter Party?
As CCP, OCC inserts itself into the middle of the loan transacted on a Loan Market such as AQS and becomes the lender to the borrower and borrower to the lender. Loans transacted at a Loan Market must be "cleared" through approved Clearing Members of OCC. Once these transactions are processed by DTC and validated at OCC, OCC novates the transaction.

What does OCC guarantee?
As CCP for Market Loan transactions, OCC guarantees the return of stock to the lender, the return of cash collateral to the borrower, and daily mark-to-market payments. OCC also guarantees rebates, buy-ins and corporate action cash dividends provided that margin in respect of such payments have been collected in advance of the payable date.

How do trades flow through the system?
Securities lending transactions matched on a Loan Market are sent to OCC on a real-time basis. OCC breaks the trade in two and inserts its own DTC account into the transactions as lender to the borrower and borrower to the lender to preserve anonymous trading. These transactions are then processed at DTC, with the securities vs. cash collateral moving through DTC. DTC reports each transaction to OCC. Once validated, OCC novates each transaction. Each loan is maintained and margined by OCC with the daily mark-to-markets moving through OCC's settlement system. Balancing reports are available along with the ability to transmit to service bureaus.

What are the margin requirements for Market Loan transactions?
Margin requirements are determined using the STANS risk management system, a proprietary, portfolio-based methodology. More detailed information can be found using the following link:

What are OCC's fees?
OCC clearing fees are $1.00 per new transaction per side. There are no fees for returns or recalls.

How do I participate?
Transactions traded on a Loan Market must clear through an OCC approved Clearing Member. Please see OCC's website for more information on Clearing Membership at:

To transact business on AQS, please see the AQS website for more information.

Who can I contact for more information?
Joseph Pellegrini
Vice President, Business Operations
Phone: 817-562-3590