Market Overview

OCC Recovery Tools, Recovery and Orderly Wind-Down Plan Approved by SEC


OCC, the
world's largest equity derivatives clearing organization
, today
announced that the U.S. Securities and Exchange Commission approved the
company's proposed recovery tools and proposed recovery and orderly
wind-down (RWD) plan, providing critical tools designed to enable OCC to
successfully manage extreme market disruptions in future financial

OCC is the first Systemically Important Financial Market Utility (SIFMU)
whose primary supervisory agency is the SEC to have its recovery tools
and RWD plan approved by the SEC.

"Today's approvals are significant accomplishments that allow OCC to
further align its recovery and wind-down planning with its peer clearing
organizations and conform to accepted international standards in the
Principles for Financial Market Infrastructures," said Craig
, OCC Executive Chairman and Chief Executive Officer. "They
also enhance OCC's ability to successfully manage extreme market
disruptions that may occur in future financial crises, which is critical
to our mission of promoting stability and market integrity."

The recovery tools and RWD plan provide several key enhancements to
OCC's resiliency:

Improved Assessment Powers: The improved
assessment powers cap each clearing member's aggregate liability to
replenish the Clearing Fund at 200 percent of the member's then-existing
required contribution, during a minimum 15-day (maximum 20-day)
cooling-off period.

  • The improved assessment powers will increase the minimum amount of
    assessments available to OCC, while eliminating the unlimited demands
    on clearing members (which could have had a destabilizing effect
    during a crisis).
  • The improved assessment powers also will provide clearing members with
    better clarity about their maximum exposure to OCC, thereby
    facilitating their own management of risk and, to the extent
    applicable, regulatory and capital considerations.

New Tools to Extinguish Losses: If an
unprecedented loss event ever threatens to exhaust OCC's Clearing Fund
resources (inclusive of assessments), the new recovery tools would
provide OCC with the ability to call for voluntary payments and
voluntary tear-ups and, if ultimately necessary, to impose mandatory
tear-ups to extinguish the positions causing such losses.

Updated RWD Plan: The updated RWD plan
better prepares OCC for potential threats, however remote, to its
viability and lays out critical steps that OCC could take to ensure
continuity of its critical clearing services to participants in times of
extreme financial distress. The updated RWD plan now includes OCC's
recovery tools and also reflects the significant organizational
improvements that OCC has accomplished over the past few years.

About OCC

OCC is the world's largest equity derivatives clearing organization and
the foundation for secure markets. Founded in 1973, OCC operates under
the jurisdiction of both the U.S. Securities and Exchange Commission
(SEC) as a registered clearing agency and the U.S. Commodity Futures
Trading Commission (CFTC) as a Derivatives Clearing Organization. Named
2018 Best Clearing House by Markets Media, OCC now provides central
counterparty (CCP) clearing and settlement services to 19 exchanges and
trading platforms for options, financial futures, security futures, and
securities lending transactions. More information about OCC is available

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