Options Clearing Corporation (OCC)

Definition

The term Options Clearing Corporation refers to an organization that provides both derivative clearing and settlement services.  Founded in 1973, the Options Clearing Corporation has grown to be the largest equity derivatives clearing organization in the world.

Explanation

Also referred to as the OCC, the Options Clearing Corporation provides derivative clearing and settlement services.  The OCC operates under the jurisdiction of the Securities and Exchange Commission (SEC) as a Registered Clearing Agency.  They also fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC) as a Derivatives Clearing Organization.

The OCC provides clearing and settlement services to exchanges as well as trading platforms for the futures and securities lending market.  This includes transactions for exchange-listed options, security futures, in addition to OTC options.  The organization provides a framework to conduct centralized counterparty clearing and settlement services for security lending transactions.  Finally, the OCC also plays an important role as a grantor, thereby ensuring the obligations of each contract cleared are also fulfilled.

The OCC is managed by its Board of Directors and receives revenues from clearing fees charged to its members. OCC offers volume discounts on fees and, as applicable, refunds excess fees to its clearing members.

Related Terms

physical delivery, overwriting, open interest, last price