SOURCE: OCC

OCC

October 16, 2009 15:36 ET

The Options Clearing Corporation Applauds the SEC, CFTC Recommendations on Harmonization of Regulation

CHICAGO, IL--(Marketwire - October 16, 2009) - The Options Clearing Corporation (OCC) released the following statement from Michael E. Cahill, OCC President and Chief Operating Officer, regarding the release of the Joint Report of the SEC and the CFTC on Harmonization of Regulation.

"OCC applauds the release of the joint SEC and CFTC report on the harmonization of regulation. OCC Chairman Wayne Luthringshausen testified at the joint meeting on harmonization last month and recommended in particular that there should be harmonization in portfolio margining, streamlining product approval and providing consistency in risk disclosure. We are pleased that included in the Joint Report there were recommendations addressing each of these issues in a comprehensive and thoughtful manner. OCC recognizes that the task is far from finished and much needs to be done, but the report clearly maps the road ahead. We look forward to working with the commissions to implement the recommendations to achieve harmonization."

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 Commodity Futures Trading Commission (CFTC) as a Derivatives Clearing Organization, and the Securities and Exchange Commission (SEC) as a Registered Clearing Agency. 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 www.optionsclearing.com.

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