Terry Flanagan

CHICAGO (July 14, 2016) – Saying its proposed rule change to the U.S. Securities and Exchange Commission (SEC) on pre-trade risk controls served as a catalyst to spur significant change in the listed equity options market, OCC, the world’s largest equity derivatives clearing organization, today said it is withdrawing the proposal.

“We firmly believe the development of our risk control principles served as the catalyst for significant and positive change in the resiliency of the listed options market, to the credit of the options exchanges and the benefit of the entire options industry,” said Craig Donohue, OCC Executive Chairman. “Since our May 2014 press release, 14 options exchanges have filed at least 37 rule changes that are consistent with the risk controls articulated in our proposal. These improvements are demonstrable steps that bolster the resiliency of the options markets against the risk from erroneous trading activity and render our review of options exchange pre-trade risk controls and associated surcharge for non-compliance redundant.

“While OCC supports the continued development and implementation of such controls, we believe any further work in this regard is best undertaken by the SEC at this time. We also believe that it is part of OCC’s core mission to ensure the robustness and resiliency of the listed options markets, and we will continue to advocate for such on behalf of the industry whenever we can.”

In 2014 and subsequent to numerous trading firm errors,  SEC Chair White requested self-regulatory organizations to work collaboratively to develop concrete measures to address specific areas where resilience of market systems can be improved.  In response, in May 2014, OCC and all of the U.S. options exchanges jointly announced the adoption of pre-trade risk control principles designed to enhance the monitoring of trading activity on a real-time basis and reduce the risk of errors that pose a material risk to OCC and can and have caused significant market disruption.  The proposed rule change associated with the Risk Controls was filed with the SEC on March 4, 2016.


About OCC

OCC is the world’s largest equity derivatives clearing organization. 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. 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 at www.theocc.com.


Media Contact:

David Prosperi



Related articles

  1. Aim is to help investors better navigate the characteristics and risks of standardized options.

  2. Trading Europe From ‘Across the Pond’

    Status grants clearing members clarity on the regulatory treatment of their exposures to OCC.

  3. Volatility Back 'With a Vengeance'

    In May CME Ether futures had the highest volumes since launch.

  4. Basel Committee Consults on Interest-Rate Risk

    The use of risk-free rates has also reached an all-time high.

  5. Cybersecurity Still a Work in Progress

    Brokers need to bolster protection against the "account intrusion" threat.