OCC’s move to ‘Cover 2’ won’t cost members more, CRO says

New clearing fund methodology will shift cost burden to firms that take more tail risk

Some clearing members may see a cut in clearing fund contributions

The Options Clearing Corporation may have found a way to cover two defaults for the price of one.

The Chicago-based clearing house announced in July that the Securities and Exchange Commission (SEC) had approved a new clearing fund methodology. The new format switches to stress-testing from treble-margin variance; it will flip the OCC’s current contribution requirements to focus on risk; and lastly, it will move the clearing fund to Cover 2 from Cover 1 – a move its chief risk officer says will