High-net-worth individuals may be lured to the over-the-counter U.S. equity options market if a first-ever clearing and matching service for the instruments gets a regulatory go-ahead. New York-based National Securities Clearing Corporation has filed a proposal to establish the NSCC Equity Options Service with the Securities and Exchange Commission, and plans to use a system similar to that employed by its parent company, the Depository Trust & Clearing Corporation. The service could launch next month, according to officials.
"[The clearing service] would increase the level of interest in OTC equity options primarily because it offers greater certainty and standardization," said James Van de Graaff, a partner with Katten Muchin Zavis Rosenman in Chicago, explaining the NSCC would eliminate counterparty risk by guaranteeing each trade. He said smaller institutional investors and high-net worth individuals, who currently view OTC equity options as too risky might be drawn into the market.
