SEC Approves New OCC Capital Plan

  • Plan Significantly Enhances OCC's Equity Capital
  • OCC Board Declares Fee Reduction Effective April 1, 2015 and $33.3 Million Refund to Clearing Members
March 06, 2015
Chicago -

OCC, the world's largest equity derivatives clearing organization, announced today that the U.S. Securities and Exchange Commission has approved OCC's capital plan, which increases shareholders' equity from $25 million at the end of 2013 to $247 million through the retention of $72 million in 2014 earnings and receipt of $150 million in equity capital contributions from OCC's stockholder exchanges: Chicago Board Options Exchange, Incorporated, International Securities Exchange, LLC, NASDAQ OMX PHLX LLC, NYSE MKT LLC, and NYSE Arca, Inc. Under the plan, the stockholder exchanges also commit to provide up to $117 million in replenishment capital in the event of unexpected losses, providing OCC with ready access to approximately $364 million in equity capital resources. Further, as OCC's target capital requirement grows, the stockholder exchanges' commitment to provide replenishment capital increases up to $200 million.

The new plan strengthens OCC's capital base and facilitates OCC's compliance with proposed SEC regulations applicable to Systemically Important Financial Market Utilities as well as international standards applicable to financial market infrastructures. The alternative would have been to institute an immediate and prolonged large increase in fees that likely would have had severe negative consequences including widened bid/ask spreads, reduced liquidity and higher costs for investors.

The capital plan enables OCC to pay a refund of $33.3 million from 2014 fees to OCC's clearing members at a time to be determined by OCC's Board of Directors. Additionally, the plan enables OCC to return to a lower fee schedule. Subject to the completion of all necessary regulatory actions, effective on April 1, 2015, the implementation of OCC's new fee schedule results in a reduction in the average clearing fee of approximately 19% from current levels, as more fully described below .

"The new capital plan will greatly strengthen our capital base from a business perspective while also enabling us to quickly meet the heightened capital requirements that are critical for SIFMUs like OCC. The capital plan represents the culmination of a year-long process to evaluate alternative means for increasing our equity capitalization," said Craig S. Donohue, OCC Executive Chairman. "Together with our success in building a world class leadership team, and our continued progress in meeting the heightened expectations of our regulators and market participants in terms of our resiliency, OCC will be on a strong footing for the future," he added.


Current Fee
New Fee
Market Maker/ Specialist
Scratch and Linkage [1]
$0.020/per contract side
$0.010/per contract side


[1]Market Maker/Specialist Scratch and Linkage trades receive a flat fee of $20 for trades greater than 2,000.

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