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

Cost cutting lou
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

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