One of OCC’s goals as the foundation for secure markets is to safeguard the integrity of cleared markets through safe and sound practices in our role as a Systemically Important Financial Market Utility (SIFMU). To help us achieve that goal, in March, OCC implemented a new cash clearing fund requirement, a measure that requires our clearing firms to collectively deposit and maintain $3 billion in cash our clearing fund.
Establishing a minimum cash contribution considerably increases the liquidity resources OCC has on hand to account for any extreme scenarios that may arise, such as a clearing firm default in a stressed market scenario. It enhances OCC’s resiliency as a SIFMU and also provides OCC with a more consistent level of cash resources. In addition, the interest income earned on the cash balance is passed through to OCC’s clearing firms, which benefits them as well.
OCC strongly believes that liquidity is central to its role as a SIFMU, and this change is a milestone for the organization. The clearing fund cash requirement was a two-year effort led by OCC’s financial risk management team with a high level of teamwork and collaboration across OCC, and serves as a great example of what our team can do on behalf of the industry when we work together.
To help ensure confidence in the financial markets and the broader economy, OCC remains committed to finding ways to enhance our resilience and promote operational excellence so that we can better serve our partner exchanges, clearing firms, and market participants.
Scot Warren is the OCC’s Chief Administrative Officer