| Industry | clearing |
|---|---|
| Founded | 1973 |
| Headquarters | Chicago, IL |
| Products | Equity derivatives |
| Website | www.theocc.com |
Options Clearing Corporation or OCC, founded in 1973, is (as of 2011) the world's largest equity derivatives clearing organization, providing central counterparty (CCP) clearing and settlement services to 14 exchanges and platforms for options, financial and commodity futures, security futures and securities lending transactions. By acting as guarantor, OCC ensures that the obligations of the contracts they clear are fulfilled.
OCC operates under the jurisdiction of both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Under its SEC jurisdiction, OCC clears transactions for put and call options on common stock and other equity issues, stock indexes, foreign currencies, interest rate composites and single-stock futures. As a registered Derivatives Clearing Organization (DCO) under CFTC jurisdiction, OCC offer clearing and settlement services for transactions in futures and options on futures contracts.
Overseeing OCC is a clearing member dominated board of directors. OCC operates as an industry utility and receives most of its revenue from clearing fees charged to its members.
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OCC's participant exchanges include: BATS, Chicago Board Options Exchange, International Securities Exchange, NASDAQ OMX BX, Inc., NASDAQ OMX PHLX, Nasdaq Stock Market, NYSE Amex, and NYSE Arca. Its clearing members serve both professional traders and public customers and comprise approximately 120 of the largest U.S. broker-dealers, futures commission merchants and non-U.S. securities firms. OCC's goal is to service clearing members and the exchanges through an operating plan that emphasizes timely, reliable, and cost-efficient clearing operations.
OCC also serves other markets, including those trading commodity futures, commodity options, and security futures. OCC clears futures contracts traded on CBOE Futures Exchange, NYSE Liffe, NASDAQ OMX Futures Exchange and ELX Futures, as well as security futures contracts traded on OneChicago and options on futures contracts traded at NYSE Liffe US. In addition, OCC provides central counterparty services for two securities lending market structures, OCC's OTC Stock Loan Program and AQS, an automated marketplace for securities lending and borrowing. OCC is also a sponsor of the Options Industry Council.
Key to a clearing organization is margin requirement, which manages its credit risk (risk of member default).
From the 1980s, the margining system was called known as TIMS (Theoretical Intermarket Margin System). In 2006, this system was replaced by a new system called STANS (System for Theoretical Analysis and Numerical Simulations).[1]