Options Clearing Corporation (OCC)

Options Clearing Corporation (OCC)

The Options Clearing Corporation (OCC) is the primary central counterparty and guarantor for listed options and certain futures-related products in the United States. It clears and settles exchange-traded options, ensures contract obligations are met, and helps manage counterparty and systemic risk across equity derivatives markets. The OCC operates under the regulatory oversight of both the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

Note: The OCC (Options Clearing Corporation) is distinct from the U.S. Treasury’s Office of the Comptroller of the Currency, which shares the same acronym.

Core functions

• Acts as central counterparty (CCP): interposes itself between buyers and sellers so each party’s obligations are to the OCC rather than to one another.
• Guarantees performance: assumes responsibility for clearing members’ settlement obligations, reducing counterparty credit risk.
• Clears and settles: handles trade confirmation, margin collection, netting, and settlement for listed options and certain futures products.
• Provides market support: offers research, investor education, customer support, and outreach to promote market stability and growth.
• Offers securities-lending clearing services for transactions that require central counterparty settlement.

Products cleared

• Equity options (puts and calls)
• Index options
• Options on futures and futures products (as a registered derivatives clearing organization under the CFTC)
• Interest rate composites
• Foreign-currency-related contracts

Market footprint and participants

The OCC serves multiple U.S. exchanges (16 participant exchanges), including major options venues such as the Chicago Board Options Exchange (CBOE), Nasdaq Options markets, NYSE American Options, NYSE Arca Options, International Securities Exchange, and others. Its clearing members—broker-dealers and exchanges—pay clearing fees that comprise the bulk of OCC revenue.

Fast fact: The OCC cleared a record 9.93 billion contracts in 2021.

Governance and oversight

A board of directors made up of exchange representatives, clearing members, and management oversees the OCC. As a systemically important market utility, it is subject to extensive regulation by the SEC and CFTC and follows risk-management practices for margining, default management, and operational resilience.

History and reforms

• Founded in 1973 to centralize and stabilize options clearing.
• After the 2008 financial crisis, regulatory scrutiny increased and the OCC expanded its risk-management capabilities.
• In the early 2010s, regulators raised concerns about governance and conflicts of interest, prompting leadership and governance changes and stronger compliance and oversight measures.

Leadership highlights

Current senior executives include seasoned industry leaders from exchanges and clearing firms, responsible for the OCC’s risk management, operations, compliance, and technological infrastructure. Key roles include the executive chair, chief executive officer, and chief operating officer, each focused on strengthening the OCC’s financial and operational resilience.

Key takeaways

• The OCC is the central clearinghouse and guarantor for most U.S. listed options and related derivatives.
• It reduces counterparty risk by acting as the buyer to every seller and the seller to every buyer.
• The organization is regulated by both the SEC and CFTC and has strengthened governance and risk practices following post-2008 reforms.
• Its services extend beyond clearing to market research, education, and support for securities-lending transactions.

The OCC plays a central role in maintaining the integrity and stability of U.S. options and certain futures markets by providing clearing, risk management, and settlement infrastructure.