The Options Clearing Corp. is to launch S&P500 equity index option clearing in Q2, 2014 following regulatory approval to clear the instrument.
Regulatory approval comes after the U.S. Securities and Exchange Commission approved a Securities Investor Protection Corporation rule change on Jan. 9, 2014, which broadens the definition of “Standardized Options” under the Securities Investor Protection Act to include OTC options cleared by OCC.
The move will allow the OCC to offer capital and operational efficiencies, as well as enhanced customer protections to the equity derivatives market. The market may benefit from margin offsets and lower clearing costs as part of the OCC’s offering of portfolio margining of listed and OTC positions that are held in a single account. Risk management will also be strengthened across the market following the approval from the SEC for the OCC to change its rules to reflect modifications to its margin model for longer tenor options.
“Being the first clearing house in the United States to clear OTC equity index options is an exciting step for OCC,” noted Craig Donohue, executive chairman, in a statement. “As the world's largest equity derivatives clearing house, this is a logical extension of our capabilities."
“OCC has been a leading innovator in the clearing and settlement of equity derivatives for more than 40 years,” added Michael Cahill, president and ceo. “We are pleased to extend the protections of our financial guarantee and our central counterparty role to the OTC equity derivatives market.”
