Our 50th Anniversary

On April 26, in the Board of Trade Building in Chicago's financial district, the Chicago Board Options Exchange (CBOE) was founded as well as its wholly owned subsidiary, CBOE Clearing Corp. -- the predecessor to OCC®. CBOE was the first U.S. exchange to trade listed options. On opening day, trading in options on 16 stocks began, and 911 total call options contracts were traded.

The U.S. Securities and Exchange Commission approved transforming CBOE Clearing Corporation into The Options Clearing Corporation® (OCC), an industry clearinghouse for all U.S. equity options.

OCC began clearing put options contracts following SEC approval. OCC also introduced Exercise by Exception (Ex-by-Ex), an automatic exercise processing program that is still used today. When introduced, Ex-by-Ex significantly reduced the paper flow and the potential for clerical errors on expiration weekends.

(Approximate Date) The first version of "Characteristics and Risks of Standardized Options," also known as the Options Disclosure Document (ODD), was developed in the 1980s. The ODD provides investors with essential information on the options market, the mechanics of listed options, and more.

OCC began clearing the first index options; these new cash-settled products were introduced by CBOE on its own CBOE 100 index, which later became the S&P 100, under the symbol OEX.

OCC installed its Clearing Management and Control System (C/MACS), its first online Clearing Member interface system.

OCC pioneered the use of cross-margining to reduce systemic risk by recognizing the offsetting value of hedged positions firms maintained at multiple clearinghouses. In 1989, OCC and CME Group collaborated to develop a similar program between both clearinghouses which is still in use.

OCC implemented a new system for clearing and settlement called INTRACS which provided enhanced assignment and position processing as well as position accounting reports, reducing the potential for errors in post-trade closing transactions.

OCC collaborated with the industry exchanges to form the Options Industry Council® (OIC®) and provide investors with education on exchange-listed options. Today, OIC serves as an industry resource from OCC that provides no-cost education through its website, webinars, videos, podcasts and trading tools.

OCC introduced its Stock Loan/Hedge Program which allowed Clearing Members to offset their option positions with stock loan positions and reduce their OCC margin requirements. The program began with 10 member firms and has expanded to 85 members as of year-end 2023.

OCC introduced online web pages for itself and OIC: www.optionsclearing.com (now www.theocc.com) and www.optionscentral.com (now www.optionseducation.org).

OCC created an initial roadmap for our current clearing system ENCORE, which would provide real-time position processing.

OCC led an industry initiative to convert pricing models from fractions to decimals.

OCC opened a new processing facility in Texas to diversify the location of our physical technology and operations for business continuity purposes. The Texas office became fully operational in 2003 and is currently OCC’s second largest office by number of colleagues.

OCC’s clearing system ENCORE began intraday trade processing, rather than processing after the close of trading. Intraday processing provided Clearing Members access to their options positions information in near real-time.

OCC’s annual cleared contract volume surpassed 1 billion contracts for the first time in our history. In contrast, total volume for the month of March 2023 alone surpassed 1 billion contracts, demonstrating the tremendous growth of options trading in the past 20 years.

OCC became the first derivatives clearinghouse to use a large-scale Monte Carlo-based risk management methodology by implementing its System for Theoretical Analysis and Numerical Simulations (STANS®) to calculate Clearing Member margin requirements.

OCC introduced its Market Loan Program and began utilizing a clearing platform for securities lending transactions executed through electronic trading systems.

OCC executed the Options Symbology Initiative (OSI), a five-year industrywide project led by OCC to eliminate the use of OPRA codes (tickers) and fractional strike prices for listed options contracts. This modernization effort provided greater consistency in how options were identified across the industry, reducing the potential for back-office and trading errors.

The U.S. Treasury’s Financial Stability Oversight Council names OCC a Systemically Important 
Financial Market Utility (SIFMU).

OCC established a first-of-its-kind pre-funded, $1 billion committed repurchase facility in collaboration with CalPERS and eSecLending. The agreement allowed CalPERS to invest with a strong counterparty, and it enabled OCC to diversify its committed lenders and provide a source of timely access to liquidity.

OCC has since expanded this non-bank facilities program to include a total of five counterparties and $2 billion in liquidity resources. Because these entities are not connected to OCC's Clearing Members (versus certain banks, which may be connected through holding companies), OCC can mitigate the potential for duplicative exposure in the event of a member default.

OCC and EquiLend Clearing Services launched a platform to expand access to OCC’s Market Loan Program.

The SEC approved Phase 1 of OCC’s Financial Safeguards Framework, improving OCC’s margin methodology and risk-based allocation as well as resizing OCC’s clearing fund to cover the simultaneous default of its two largest clearing member firms (Cover Two). The new Financial Safeguards Framework also reduced pro-cyclicality by decoupling the simultaneous increase in margin and clearing fund contributions that can place undue liquidity demands on OCC’s Clearing Members.

OCC announced its Renaissance Initiative to modernize its technology infrastructure. The new system will overhaul OCC’s risk, clearing, and data systems.

The SEC approved Phases II & III of OCC’s Financial Safeguards Framework, which  implemented significant enhancements to OCC’s margin and stress testing methodologies and established a new approach to liquidity stress testing and determining the sufficiency of OCC’s liquidity resources, respectively.

The SEC approved OCC’s proposed amendment to establish a persistent minimum level of skin-in-the-game (SITG). OCC’s SITG includes contributions via its Executive Deferred Compensation Plan (EDCP), a unique program among CCPs.

A SEC issued notice of no objection to OCC’s proposal to adopt cloud technology for its clearing, settlement, and risk management platform, making OCC the first SIFMU to receive a notice of no objection for migration of core systems to the cloud.

The SEC approved OCC’s amendment to its clearing membership criteria allowing banks to apply for membership. Previously, membership was restricted to broker-dealers and futures commission merchants.