New $1 billion repurchase facility for OCC
21 January 2015 Chicago
Image: Shutterstock
OCC has established a pre-funded, $1 billion committed repurchase facility with a leading pension fund.
The facility increases OCC's overall liquidity resources from $2 billion to $3 billion, while diversifying OCC's committed lenders to include qualified pension funds in addition to OCC's existing participant base of banks and broker-dealers.
"We are very pleased to lead our industry by expanding the scope of committed liquidity facilities for central counterparties given the significant changes that are occurring in the banking industry," said John Fennell, executive vice president of risk management at OCC.
Committed liquidity facilities ensure that sufficient capacity is maintained to fund payment obligations to clearing members in a timely way, promoting the uninterrupted flow of financial markets.
"With the phasing in of new bank capital requirements affecting these types of arrangements, we anticipate that the supply of committed credit facilities from banks may contract.”
Craig Donohue, executive chairman of OCC, said: "Increasing our total resources and implementing this innovative solution to expand the range of qualified lenders that we rely upon will facilitate the continued growth of the US options industry and the futures markets that we serve while further enhancing our resiliency."
The US Securities and Exchange Commission published a notice of no objection to the central counterparty’s initial plans in the Federal Register on 8 January.
The facility increases OCC's overall liquidity resources from $2 billion to $3 billion, while diversifying OCC's committed lenders to include qualified pension funds in addition to OCC's existing participant base of banks and broker-dealers.
"We are very pleased to lead our industry by expanding the scope of committed liquidity facilities for central counterparties given the significant changes that are occurring in the banking industry," said John Fennell, executive vice president of risk management at OCC.
Committed liquidity facilities ensure that sufficient capacity is maintained to fund payment obligations to clearing members in a timely way, promoting the uninterrupted flow of financial markets.
"With the phasing in of new bank capital requirements affecting these types of arrangements, we anticipate that the supply of committed credit facilities from banks may contract.”
Craig Donohue, executive chairman of OCC, said: "Increasing our total resources and implementing this innovative solution to expand the range of qualified lenders that we rely upon will facilitate the continued growth of the US options industry and the futures markets that we serve while further enhancing our resiliency."
The US Securities and Exchange Commission published a notice of no objection to the central counterparty’s initial plans in the Federal Register on 8 January.
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