OCC Successfully Launches Clearing OTC S&P 500 Equity Index Options on April 25

April 28, 2014
Chicago -

OCC announced today it launched its over-the-counter S&P 500® equity index option clearing services on Friday, April 25, bringing capital and operational efficiencies and enhanced customer protections to the OTC equity derivatives marketplace.

"We are very pleased to be the first clearing house in the U.S. to clear OTC equity index options and bring the strength of OCC's systems and risk management to this marketplace," said Craig Donohue, Executive Chairman of OCC. "OCC's clearing members can leverage our existing clearing and risk management systems with no additional connectivity, while the entire marketplace benefits from the protections of a central counterparty and OCC's financial safeguards. This clearing service is an example of our commitment to provide value-added services and be a source of strength and reliability for the industry."

This voluntary equity OTC clearing solution successfully began phase one for the dealer-to-dealer market, including day-one participants JP Morgan Clearing Corp, Deutsche Bank, Barclays, Morgan Stanley, and BNP Paribas, among others. All day-one participants completed rigorous pre-launch testing between their firms, MarkitSERV and OCC.

The first cleared trade was bilaterally negotiated between JP Morgan Clearing Corp. and Morgan Stanley, affirmed on MarkitSERV's platform, and seamlessly routed to OCC for clearing on Friday at 10:38 a.m. CDT.

"We are very pleased to have had the opportunity to participate in the development of the first Equity OTC clearing product with OCC," said Brian Goodman, Executive Director of JPMorgan. "The S&P Equity OTC cleared option offers the industry a risk mitigating tool with the inclusion of true portfolio margin across US Listed Options. It's a customizable equity index option product that benefits an array of investors."

The second phase, dealer-to-client clearing, is scheduled to launch later this year. While margin offsets will remain an important feature, the second phase will also bring clients greater customer protection through the Securities Investor Protection Corporation . The recent approval of rule changes enhances the protections afforded to customers in the event of a liquidation of their broker-dealer and serves to mitigate counterparty risk.

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