OCC's Transformation: Enhanced Efficiency and Agility

December 04, 2019

By Bill Raczyk, OCC Vice President, Process Innovation

In an age of ever-more-rapidly evolving technology, businesses need to engage in constant reinvention to remain relevant. OCC, the world's largest equity derivatives clearing organization, is no different.

Bill RaczykAs a Systemically Important Financial Market Utility (SIFMU), we understand the need to re-assess and enhance our risk management, clearing and data systems to better serve the users of the U.S. equity derivatives markets.

We started making process improvements in a very tactical manner in 2015, using the low-code development platform Appian. This allowed us to implement workflow automation. We have since automated 19 processes and recently added task execution using robotic process automation (RPA). These improvements have been successful in helping my colleagues drive improved transparency, enhanced traceability and reduced human-error risk.

The Renaissance Initiative: Thinking Bigger

While we are off to a good start, our workflow automation improvements have been very targeted in scope. To get where we need to go, we ultimately must address the overall modernization of OCC's risk management, clearing and data systems. So, in January 2019 we launched our Renaissance Initiative. It covers a much broader scope, with a renewed emphasis on customer service, agility and efficiency. It will also, upon its completion, transition OCC into a company with a continuous improvement practice.

Our re-invention will not be a simple undertaking. Many of our current processes and controls have been the product of the inflexibility of our existing, 20-year-old core clearing system. User-developed applications, double verification and other accommodations were put in place to ensure quality from the system and the data within it. While the system delivers on a daily basis and can handle record trading volume (in 2018, on average about 21 million contracts a day and over 19 million so far in 2019), enhancements are becoming increasingly difficult. Procedures were built to support those inefficiencies. Our new process design effort will question those embedded practices and challenge my colleagues to identify system functionality that will deliver the same quality of work with greatly enhanced efficiency and agility.

Tackling the "Why" of What We Do

It seems simple enough, but we are looking at each process, each business capability and answering the question of why it exists. In other words: Whom does each process serve? What information or data does it consume, improve and then pass on? The answers to these questions will allow us to (re)design based on how we want to deliver value going forward. Those process designs will then help drive requirements for the new systems as well as other tools, such as the workflow products we already have in place.

This represents a significant shift in our organizational mindset. We are approaching it from both top down and bottom up. From the top down, our goal is to improve our efficiency while increasing value to the users of our markets. And from the bottom up is how we deliver value. We are focusing not only on how automation will deliver more actionable information, but also challenging the existing department structures to determine the clearest path to getting work done.

When thinking through our processes, it's not just lining up tasks with people. It's also about data alignment. Our colleagues need specific data to complete their tasks; frequently, their primary role is to take a piece of data, enrich it, and pass it along to the next process or transmit it to another entity, either internally or externally. Developing an awareness of who or what uses that data next (and for what purpose) provides a richer background for decisions within each process step.

Achieving Our Goals

Tearing down long-standing structures is never easy. But through process redesign, an open mindset and greater access to data, my colleagues at OCC will reach the agility and resiliency goals we have set. OCC's transformation will be worth the effort, if we are driving greater operational and capital efficiencies to the users of our markets.

This post was adapted from a by-lined article, "'Transformation' Underway at OCC", published in CIO Applications in October 2019.

Learn more about OCC's transformation on our website.

Learn more about OCC's thought leadership on our blog.




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