OCC, the world’s largest equity derivatives clearing organization, announced that State Street is the first bank to become an OCC clearing member. OCC will provide central counterparty clearing and settlement through its Stock Loan Program for State Street’s Prime Services platform, which offers integrated custody-based securities lending solutions to investors.

“State Street’s decision to be our first bank clearing member is a significant milestone for both OCC and the marketplace, as their willingness to pioneer this path demonstrates the value that central clearing can bring to custody-based services,” said Oberon Knapp, Managing Director of Strategy and Head of Securities Finance at OCC. “Our qualifying central counterparty status provides our members with approximately 95% risk-weighted asset savings compared to uncleared lending activity, and our guarantee helps mitigate counterparty credit risk, allowing our clearing members like State Street to focus more resources and time on their core business. Expanded membership continues to be a top priority for OCC so that the broader financial ecosystem can access the capital efficiency, risk reduction and operational simplicity benefits that OCC’s central clearing services provide.”

Brendan Eccles, global head of Prime Services at State Street said, “As a market leader with our Prime Services business, becoming an OCC clearing member was a strategic milestone reflecting the growing importance of central clearing in the securities finance landscape. This relationship strengthens our capital efficiency within our custody-based Prime Services model while providing our clients with greater access to securities lending opportunities. We are proud to be the first bank clearing member of OCC supporting our Prime Services business and look forward to delivering additional cleared solutions across our Financing Solutions product suite.”

OCC currently operates two programs in which it acts as principal counterparty for securities lending transactions: the Stock Loan/Hedge Program where trades are executed bilaterally, and the Market Loan Program where trades are executed anonymously through a loan market. In both programs, OCC becomes the lender to the borrower and the borrower to the lender for each transaction, guaranteeing the value of the lender’s lent shares and of the borrower’s collateral.

Source: OCC