SOURCE: Options Clearing Corporation

Options Clearing Corporation

November 19, 2009 13:38 ET

The Options Clearing Corporation Announces November Test Results Show Increasing OSI Readiness

CHICAGO, IL--(Marketwire - November 19, 2009) - The Options Clearing Corporation (OCC) announced today that the second round of testing for the Options Symbology Initiative (OSI) concluded successfully and the industry is on track with preparations for next year's changes.

Two more rounds of mandated Scripted Industry Testing (SIT) are scheduled for December and January prior to the February 12, 2010 final conversion date when the industry must be OSI compliant.

While the first two rounds of testing simulated the February 12, 2010 switch to the new OSI key, the November 14, 2009 SIT simulated the consolidation process that will take place between March and May of 2010. Participants in the second round of testing included 73 clearing members, seven exchanges, four service bureaus, OPRA and several price vendors. The number of clearing members that participated in the test represent approximately 91% of the year to date cleared options volume. Additionally, over 12,700 trades were processed by the exchanges and sent to OCC as matched trades.

After the beta and first round of mandatory testing, it was determined that some of the scripting needed to be revised to successfully execute the remaining tests. As a result, during November's test, clearing members executed trades in the post consolidated classes, exchanges passed those matched trades to OCC and OCC was able to pass OSI compliant and consolidated data back to clearing members in a smooth fashion. The testing continues to be going well as indicated by the positive feedback and input from participants throughout all phases of the initiative.

About OCC:

OCC is the world's largest derivatives clearing organization by contract volume and open interest. Founded in 1973, OCC operates under the jurisdiction of both the Securities and Exchange Commission (SEC) as a Registered Clearing Agency and the Commodity Futures Trading Commission (CFTC) as a Derivatives Clearing Organization. OCC now provides central counterparty (CCP) clearing and settlement services to 13 exchanges and platforms for options, financial and commodity futures, security futures and securities lending transactions.

As the CCP clearinghouse for the markets it serves, OCC assumes the counterparty risk of members involved in a trade -- becoming the buyer to every seller and the seller to every buyer. OCC manages its risk of member default by collecting margin (collateral). Clearing member margin requirements are calculated using OCC's proprietary System for Theoretical Analysis and Numerical Simulations (STANS) that uses large-scale Monte Carlo simulations to forecast price moves and correlations to make those margin determinations. In 1993, OCC became the first clearinghouse to receive a 'AAA' credit rating from Standard & Poor's Corporation, and has continued to receive that high rating every year as a result of its risk management standards.

OCC operates as a utility clearinghouse, owned by several of its participant exchanges but with a Board of Directors majority drawn from its clearing members, allowing it to provide highly efficient but low-cost solutions to the markets it serves. More information about OCC is available through its Web site at

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