SEC approves OCC rule change
14 April 2011 Chicago
Image: Shutterstock
The US Securities and Exchange Commission has approved a rule change clarifying the net capital treatment of certain stock loan transactions processed through OCC, confirming the central counterparty clearing benefits OCC brings to this marketplace.
SEC rules governing securities lending require broker-dealers to take a capital charge associated with collateral posted in certain stock borrow transactions. In December, OCC filed the rule change to clarify the regulatory treatment under Rule 15c3-1 of collateral and margin posted by clearing members for transactions through their participation in one of OCC’s stock loan programmes. The rule change means firms would not be required to take a deduction from net capital for stock loan transactions while participating in OCC’s Stock Loan/Hedge or Market Loan programmes as the collateral related to the loaned stock is secured and offset in OCC’s margin system.
This rule change is part of OCC’s continuing effort to enhance capital efficiency for its clearing members. When added to the security afforded by OCC’s risk management, it provides a greater incentive for firms to conduct the securities lending transactions in a cleared environment.
SEC rules governing securities lending require broker-dealers to take a capital charge associated with collateral posted in certain stock borrow transactions. In December, OCC filed the rule change to clarify the regulatory treatment under Rule 15c3-1 of collateral and margin posted by clearing members for transactions through their participation in one of OCC’s stock loan programmes. The rule change means firms would not be required to take a deduction from net capital for stock loan transactions while participating in OCC’s Stock Loan/Hedge or Market Loan programmes as the collateral related to the loaned stock is secured and offset in OCC’s margin system.
This rule change is part of OCC’s continuing effort to enhance capital efficiency for its clearing members. When added to the security afforded by OCC’s risk management, it provides a greater incentive for firms to conduct the securities lending transactions in a cleared environment.
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