Options Clearing Corporation Rule Change on Collateral Types
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This rule change by the Options Clearing Corporation (OCC) revises the types of collateral it accepts and addresses specific risks to enhance financial stability. It disallows the use of letters of credit and government-sponsored entity (GSE) debt securities as collateral. It also expands margin requirements for cryptocurrency-related products to mitigate risk. These changes are generally aimed at OCC's clearing members and are meant to reduce operational complexity and improve risk management.
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Key Changes
- Discontinued acceptance of GSE debt securities and letters of credit as collateral
- Extended SWWR Add-on to cryptocurrency-related products
- Organizational changes to enhance rule clarity
Obligations
What this law requires
OCC Clearing Members must cease posting letters of credit as margin collateral
OCC Clearing Members must cease posting government-sponsored entity (GSE) debt securities as margin collateral
OCC must apply margin add-on charge (SWWR Add-on) to Clearing Member positions in spot cryptocurrency exchange traded products (ETPs) where the Clearing Member or its affiliate serves as custodian of the fund's cryptocurrency holdings
OCC Clearing Members must limit their ability to pledge spot cryptocurrency ETPs as margin collateral to amounts that are risk-reducing for activity in cleared positions
All collateral assets deposited with OCC must be free of liens and other encumbrances